What evidence do lenders want for IP collateral?

Full Explanation

Lenders assessing intellectual property as security work through a consistent checklist before they will lend against it. First they need clean, unencumbered legal title: the borrower must own the rights outright, with a documented chain of title showing that any IP created by contractors or employees has been properly assigned to the company. Gaps here are the single most common reason IP-backed lending stalls. Second, they require an independent IP audit and a valuation prepared to a credit standard, typically under IVS 210 (Intangible Assets) and the RICS Red Book (VPGA 6), so the figure is defensible rather than a founder's estimate. Beyond title and value, lenders confirm the rights are in force — patents, trade marks and registered designs with renewals paid — because lapsed rights are worthless as security. They run encumbrance and prior-charge searches at both Companies House and the UK Intellectual Property Office to check that nothing already sits ahead of them. Registered rights carry far more weight than unregistered know-how because they are easier to identify, transfer and enforce. Underpinning all of this, the lender wants evidence of genuine commercial value and cash generation: IP that produces attributable revenue or royalty income is the preferred collateral. This is where an evidence grade helps. Lenders instinctively map each asset to a bank-readiness level — from unsupported assertion up to fully documented, independently verified title and value. The stronger and better-evidenced the pack, the higher the loan-to-value a lender will consider. NatWest's High Growth IP Loan, for example, lends up to around 50% of appraised IP value, with the IP valued and revalued annually by an independent valuer; HSBC UK and HSBC Innovation Banking take comparable comfort from documented, in-force rights. The practical next step is to assemble everything a credit team reads in one place before you approach a lender: the register of IP assets, assignment deeds proving title, renewal records, an independent valuation, and encumbrance searches. Opagio's collateral pack brings the register, valuation, evidence grading and financials together so an adviser or founder can see exactly where the evidence is thin and fix it before a lender ever asks.

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