NatWest Group has launched a new lending proposition for high-growth businesses to enable them to lever off the value of their intellectual property.
High-growth businesses generally own few tangible assets, but can be rich in IP and intangible assets. These businesses can find it difficult to use their assets as collateral to secure growth funding, especially when compared with firms holding more conventional assets.
NatWest says this has led to a large growth funding gap for fast-growing, asset-light businesses which is estimated to be as much as £15 billion annually.
The bank will initially assess loan applications to establish whether the customer meets the criteria for standard lending options – but if it cannot meet a high-growth business’s borrowing needs through conventional security criteria, it will consider whether it could raise funding by using their qualifying IP assets as collateral.
The bank will use valuations provided by the specialist IP evaluation company Inngot to identify and evaluate relevant assets which could be taken as security for loans.
“As the UK’s leading business bank, we are delighted to have joined forces with Inngot, to provide a truly innovative and progressive proposition for high growth SMEs and scaleup businesses,” said Andy Gray, managing director of commercial mid-market at NatWest Group.
“Many of these businesses struggle to access debt funding when they need it without having to dilute equity. This new offering will allow these firms to go further and faster in their growth journey.”
Martin Brassell, CEO of Inngot, added: “With this new proposition, NatWest is recognising that IP is a vital component of value for growth companies that must be considered properly in lending decisions.
“Many entrepreneurs will welcome NatWest’s emphasis on a business’s intangibles, which have often gone ignored, rather than relying on personal or tangible assets.
“There is massive potential to transform the prospects of some of our most exciting firms by enabling them to leverage the things that really drive their success.”