NatWest Announces Lending Scheme for IP-based High Growth Businesses
Last month, NatWest Group has announced an expansion of their lending scheme to now include high growth businesses based on their IP and other intangible assets. Before this expansion, many high growth businesses with few tangible assets, frequently found themselves unable to secure loans due to not meeting conventional security requirements. Now however, NatWest could use these businesses’ qualifying IP assets as collateral instead, allowing them to access greater funding.
This scheme aims to help bridge the developing gap in funding for high growth, asset-light businesses, which according to a report published by ScaleUp Institute in August 2020, is worth over £15 billion annually. ScaleUp Institute’s latest 2023 annual review highlights the importance of fixing this funding gap. In 2023, the 28,410 scale-ups in the UK – just 0.5% the of SME population - reportedly generated more than £1.3 trillion to the economy, accounting for 58% of total turnover for all UK SMEs. Additionally, these 28,410 companies provide employment for over 2.6 million people.
It is hoped that providing these high growth businesses easier access to loans will help them thrive and expand, and thus increase their positive impact on the UK economy. ScaleUp Institute estimates that, through schemes such as this one, closing this gap in the funding market could create up to 3 million new jobs and even double the number of scaleup firms that survive over a 5-10 year period.
In order to qualify for this high growth loan from NatWest Group, businesses will need to demonstrate three consecutive years of at least 20% annual growth, with a minimum turnover of £250,000. Alternatively, businesses with an equity or grant investment of at least £50,000 in the last two years could also qualify. Qualifying businesses will first be assessed using more traditional lending criteria, such as real estate, inventory and invoice finance. However, if NatWest Group are unable to meet the companies borrowing needs using the standard criteria, valuations of intangible assets can then be used to boost the loan amount offered.
Katherine Hampton, PhD (Cell Biology) student and Intern for ip21 Ltd