IP
LENDING
WHAT IS INTELLECTUAL PROPERTY (IP) LENDING?
Asset-based lending (ABL) against intellectual property enables companies to use patents, trademarks, copyrights, and trade secrets as collateral to access capital. Unlike traditional lending relying on tangible assets, this approach recognizes the substantial value in intangible assets that comprise over 80% of value in many modern Australian businesses.
How It Works
ABL IP lending establishes a borrowing base against verified intellectual property assets. Lenders conduct thorough due diligence including IP ownership verification through IP Australia, valuation assessments using income and market approaches, and security registration through the Personal Property Securities Register (PPSR). Advance rates typically range from 50-70% of appraised value.
Beyond Traditional Solutions
This financing addresses a critical gap for IP-rich, asset-light companies struggling with conventional lending criteria. Technology firms, biotechnology companies, and innovation-driven enterprises often possess valuable IP portfolios but lack fixed assets traditional lenders require. ABL IP lending provides non-dilutive capital without surrendering equity.
Real-World Application
Consider an Australian biotech company with promising drug patents but limited physical assets, growing fast but is yet to make a profit. Traditional banks might decline funding despite strong patent portfolios and licensing revenue. Through ABL IP lending, the company could secure financing against patents valued at $10 million, accessing ~ $7 million for clinical trials while retaining IP ownership and licensing income.
Very few lenders offer this sophisticated product, creating significant opportunities for borrowers accessing these solutions. For companies seeking growth capital without diluting ownership, ABL IP lending represents an underutilized financing tool aligning funding with modern business value drivers.