CIPA welcomes Government plans to unlock finance for IP-rich businesses

The Chartered Institute of Patent Attorneys has welcomed the Government’s announcement of measures designed to improve access to finance for innovative businesses by encouraging greater lending to companies whose value is built on intellectual property and other intangible assets.

As part of a wider package of reforms announced by the Chancellor, the British Business Bank has been asked to explore how its ENABLE Guarantee programme can support increased lending to innovative businesses. Rather than lending directly to SMEs, the programme provides guarantees to participating commercial lenders, reducing the risks associated with lending and encouraging greater investment in high-growth companies.

The announcement recognises a longstanding challenge facing many innovative businesses. While patents, software, trade marks, know-how and other intellectual property often represent a company’s most valuable assets, traditional lending has typically focused on physical assets, making it harder for many IP-rich SMEs to secure the finance they need to commercialise innovation and scale.

CIPA has long championed the development of the UK’s IP finance market. The Institute has supported and promoted pioneering IP-backed lending products developed by mainstream lenders, including NatWest’s specialist IP-backed lending proposition, demonstrating that intellectual property can be recognised as a valuable business asset within commercial lending.

More recently, CIPA responded to the Department for Business and Trade and HM Treasury’s call for evidence on small business access to debt finance. Led by Dr Claudia Duffy, a member of the UKIPO’s IP Finance Advisory Group and Chair of CIPA’s IP Commercialisation Committee, the response drew on evidence from innovative SMEs, lenders and IP finance specialists to highlight the barriers faced by businesses whose assets are predominantly intangible. It also proposed practical measures to strengthen the UK’s IP finance ecosystem, including improving IP identification, valuation and lender confidence, so that more innovative businesses can access growth finance.

Dr Duffy said: ‘This announcement addresses a gap our Committee has been raising for some time. The £500 million allocated within the British Business Bank’s ENABLE Guarantee programme, specifically for IP-rich SMEs, is a significant and welcome step. When we responded to the Department for Business and Trade and HM Treasury’s call for evidence last year, the evidence from innovative businesses, lenders and IP finance specialists was consistent: intangible assets like patents, trade marks and know-how are frequently a company’s most valuable resource, yet lenders have lacked the tools and confidence to lend against them. Better identification and valuation of IP, alongside guarantees that reduce lender risk, are exactly the kind of practical measures needed to close that gap.’

Commenting on the announcement, Simon Wright, President of CIPA, said: ‘We welcome the Government’s commitment to improve access to finance for innovative businesses. Too often, companies with world-class ideas and valuable intellectual property find it harder to secure the capital they need to commercialise their innovations and scale.

‘Patent attorneys play a crucial role in helping businesses identify, protect and demonstrate the value of their intellectual property, giving investors and lenders greater confidence in innovation-led growth. We look forward to working with the British Business Bank, lenders and Government to help ensure these proposals translate into practical financing solutions that unlock the full economic potential of the UK’s IP-rich businesses.‘

CIPA believes the Government’s announcement is an important opportunity to build on the progress already being made in the UK IP finance market. As the proposals are developed, the Institute looks forward to contributing the expertise of the patent attorney profession to help ensure innovative businesses across the UK can translate strong intellectual property into stronger commercial outcomes, increased investment and sustainable economic growth.