What is Intellectual Property Financing? Every business owner should value his/her physical assets, including a building, land, equipment, and inventory. However, a business’s intellectual property is critical to an enterprise’s long-term success. As American biotechnologist and businessman Craig Venter said, “Intellectual property is a key aspect for economic development.” And here’s an important thing to know. Intellectual property financing can be used to help drive business progress and achieve success. 

What is Intellectual Property? 

Intellectual property (IP) is defined as the intangible work of inventors, creators, writers, and artists. It is also the reputation of brands and companies. Intellectual property is protected by patent law, copyright law, trademark law, and trade secrets law. Intellectual property law protects creators, inventors, and businesses, giving them exclusive rights to their work and allowing them to profit from their work and investments.

Why is Intellectual Property Important? 

Intellectual property can contribute significantly to the success of a business because it helps set a business apart from its competitors, even offering competitive advantages to a business by helping to build brand trust and customer loyalty. Intellectual property can be essential to a company’s marketing and branding. Intellectual property protections like patents can contribute to a company’s bottom line. Intellectual property law protects the expression of an idea and protects specific products. Intellectual property financing can also be an element of enterprise funding. 

What is Intellectual Property Financing? 

Every business needs funding to thrive and grow. In today’s competitive business climate, intellectual property financing is becoming an increasingly popular and innovative way to secure capital. Several ways to secure financing using intellectual property include IP-backed loans, royalty financing, and IP monetizing strategies.

How Does this Financing Work? 

Intellectual property financing works in several ways: 

First, trademarks or patents can be sold directly to another organization or licensed for royalties. This approach is frequently used in the music and film industries, and the practice is increasing in the biotechnology and software industries. 

Second, borrowing money against a company’s IP assets is the most straightforward approach. The IP assets are used as collateral for a loan. If the borrower defaults on such a loan, the IP assets can be sold to pay off the loan. 

It is important to note that big banks typically do not have the specialized knowledge to deal with IP-backed loans because of the challenge of providing an accurate valuation. Typically, the focus of a bank is to provide loans based on a company’s past revenues. Instead, IP finance companies have the experience and focus to provide proper valuation; thus, they can provide loans with larger amounts than banks. Intellectual property financing using an IP financing specialist can be fast and easy, with flexible terms, lower costs, and lower rates.

Who Can Apply for Intellectual Property Financing?    

  1. Companies that have patents, trademarks, and brands with considerable value. 
  2. Companies that do not have access to the more traditional funding sources. 
  3. More mature companies that want to leverage their IP assets to expand. 

Seek Professional Accounting Assistance  

When you seek financing, you need to be extra mindful of how you manage it. That’s why it’s important to hire a trusted accountant who has your business’s financial well-being in mind. Contact Nolan Accounting Center, based in Greenfield, WI. We build strong relationships and support strategies for success. We provide accounting, tax preparation, bookkeeping, and payroll services to small business owners in Southeast Wisconsin, including Milwaukee, Greenfield, New Berlin, Muskego, West Allis, and Waukesha.