How do lenders check IP ownership and title?

Full Explanation

Before a lender will advance against your intellectual property, it must be satisfied that you actually own the IP, that your title is clean and unencumbered, and that the rights are enforceable. The starting point is an independent IP audit: a specialist reviews your patents, trade marks, registered designs and key unregistered rights, confirms they are in force (renewal fees paid, filings current), and documents the chain of title back to the original creators. Where contractors or employees created material IP, the auditor checks that it was properly assigned to the company rather than left with the individual.

Lenders then run encumbrance and prior-charge searches in two places: at Companies House, to reveal existing fixed or floating charges, and at the UK Intellectual Property Office, where assignments and security interests over registered rights are recorded. A prior charge, an unresolved licence, or a co-ownership dispute is a red flag, because it dilutes what the lender could realise on default. NatWest's High Growth IP Loan, for example, uses an independent valuer (Inngot) to appraise and annually revalue the IP, and treats IP as a fallback once conventional security is exhausted. HSBC UK, HSBC Innovation Banking and specialist insurance-backed lenders such as Aon, Fortress and Brevet apply comparable diligence.

Ownership diligence feeds directly into how the collateral is judged. Lenders weigh three tests: separability (can the IP be sold or licensed apart from the business), saleability (how readily it could be realised on default), and legal strength (is the title clean and enforceable). Clean, well-documented title lifts legal strength and, with it, the advance rate; broken title depresses it or removes the asset from the borrowing base entirely. Valuation to a credit standard follows the International Valuation Standards, principally IVS 210, and RICS Red Book guidance under VPGA 6, using a conservative, orderly-disposal premise.

The practical next step is to get ahead of the lender: commission an IP audit and run your own Companies House and IPO searches before you apply. Confirm every renewal is paid, every contractor and employee assignment is signed, and any historic charges are released. Presenting a clean title pack at the outset shortens diligence and protects your terms.

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