11 November 2013Copyright

UK releases report on IP and SMEs

A new report published today encourages UK-based small and-medium-sized enterprises (SMEs) to use their IP to secure finance.

The report, ‘Banking on IP? – The role of intellectual property and intangible assets in facilitating business finance’ has been published by the UK Intellectual Property Office (IPO).

It makes key recommendations including the creation of a ‘resource toolkit’ aimed at helping SMEs, lenders and other financiers to understand and make more effective use of IP.

It encourages building on existing initiatives such as the Business Finance Partnership, the Enterprise Investment Scheme and the Patent Box.

The report says that as part of the study, the IPO conducted interviews with finance professionals across a “wide range of different sectors and disciplines.”

“ … most recognise and acknowledge that credit decisioning and account management can both benefit from better  information on, and understanding of, IP and intangibles,” the report says.

The report notes that it does not advocate changes to the legislative framework, policy priorities, or to accounting standards, adding “the steps required to unlock the business value of IP are pragmatic measures that build on principles and practices which exist today.”

The report says IP markets and financing could be facilitated through infrastructure improvements including the emergence of more “transparent and accessible marketplaces.”

“IP does not stop being important once credit is granted,” the report says, adding that there could also be a role for the introduction of ‘milestones’ and impairment tests to ensure that businesses are well-informed and motivated to adopt appropriate IP management.

Kelvin King of Marks & Clerk Consulting and managing director of Valuation Consulting Co, who co-wrote the report, urged the UK to start taking IP financing seriously.

If it does not, it will “be missing a huge opportunity for both banks and SMEs,” King said.

“Currently, there is poor understanding among both mainstream lenders and SMEs of how IP can be used to secure business finance.

“Changes to the legislative framework, to policy priorities or to accounting standards are not needed to unlock the financial potential of IP. However, the lending market as a whole needs to take on board lessons already learnt if it is to successfully embrace IP-backed lending.”

“We are keen to see how Government and the lending market will respond to the needs of the UK’s SMEs,” King added.

The report is available on the IPO website.

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