The Royal Bank of Scotland is set to introduce loans backed by intellectual property, with amounts varying from £250,000 to £10 million

The Royal Bank of Scotland (RBS) has announced a new initiative to introduce loans backed by intellectual property (IP) targeted at "high growth businesses" in Scotland.

These loans will provide companies the opportunity to secure essential financing by using their intellectual property as collateral rather than relying on conventional physical assets.

RBS anticipates rolling out these IP-backed loans in Scotland by 2026.

The introduction of the Moveable Transactions (Scotland) Act 2023 earlier this year allows lenders to accept "effective security over IP rights," paving the way for this development.

RBS plans to offer loans ranging from £250,000 to £10 million to enhance funding access for Scottish businesses that face difficulties obtaining financing due to a "lack of fixed assets."

NatWest Group, the parent company of RBS, had already launched a similar IP-backed loan program in England and Wales last year, including a noteworthy £600,000 loan for Liverpool-based developer Ripstone to support new project developments.

The loans were developed in collaboration with IP valuation specialists Inngot, utilizing Inngot's tools for IP identification and valuation.

Judith Cruickshank, Chair of the Scotland Board for NatWest Group, stated, "This new loan underscores our commitment to fostering innovation and supporting businesses at various stages seeking investment both domestically and internationally."

Cruickshank added that, as companies increasingly invest in AI and digital capabilities, there is expected to be a greater need for technology-driven services that may lack the tangible assets of more traditional operations.

She highlighted that the IP-backed loan program exemplifies NatWest's efforts to bolster Scotland’s digital economy, enabling IP-rich companies to expedite investment and growth without diluting ownership stakes.

Douglas Alexander, the Secretary of State for Scotland, remarked that RBS's announcement is "welcome news," as it broadens the financial tools available to innovative firms seeking to tap into Scotland's technological and life sciences potential.

Alexander noted that allowing Scottish businesses to use intellectual property as collateral can eliminate traditional financing hurdles that have impeded some of the nation’s most inventive companies.

He concluded by expressing that this funding option could assist IP-rich businesses in scaling up and competing globally.