What is non-dilutive funding for IP-rich companies?

Full Explanation

Non-dilutive funding is money a company raises without giving away equity. For IP-rich companies, whose balance sheets are dominated by patents, software, brands and data rather than property or machinery, the most relevant form is IP-backed lending: borrowing against the intangible assets themselves so founders keep their ownership and control intact. It sits alongside other non-dilutive routes such as grants, R&D tax credits and revenue-based finance, but IP-backed debt is the one that turns an otherwise unfinanceable asset base into borrowing capacity.

The UK market has matured quickly. NatWest's High Growth IP Loan, the first from a UK high-street bank, lends from £250,000 at up to around 50 per cent of appraised IP value, with the IP valued and revalued annually by an independent valuer. It has been offered in England and Wales since January 2024, and the Royal Bank of Scotland launched IP-backed lending in Scotland in June 2026. In July 2026 the British Business Bank allocated £500 million of its ENABLE Guarantee capacity to lending to IP-rich SMEs and scaling firms. Other lenders set their own ratios, and the loan is also capped by the debt the business's cash flow can service. Eligibility typically favours high-growth companies, for example 20 per cent year-on-year turnover growth over three years, and IP-backed lending is usually a fallback after conventional security. For how IP-backed debt compares with grants, venture debt, revenue-based financing and the other UK options, see our guide to non-dilutive funding.

To qualify, the fundamentals must be sound. Lenders require clean, unencumbered legal title with a documented chain of title, an independent IP audit, rights that are in force, and charge searches at Companies House and the UK IPO. Crucially, the loan is still serviced from operating cash flow, not the collateral, so lenders test the debt service coverage ratio (commonly a minimum around 1.20 to 1.25 times) against two to three years of accounts plus forecasts. Valuation follows IVS 210 (Intangible Assets) and the RICS Red Book, using conservative, liquidation-based inputs.

Your practical next step: assess whether your IP is registered, owned outright and revenue-generating, then assemble a single collateral-and-evidence pack (register, valuation, evidence grading and financials) before approaching a lender, so you can raise growth capital without touching your cap table.

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