U.S. Banks Contemplating Use of Patents as Security for Loans

U.S. Banks Contemplating Use of Patents as Security for Loans

2022 sees a staggering $836 billion rise in intangible assets like patents in the U.S, showcasing their potential beyond mere legal rights. But can these patents secure asset-based loans just as effectively? Let's dive in and find out!

Patents can boost loan applications, but their worth as collateral can be tricky to demonstrate due to their lack of a set price tag. To help you navigate this challenge, here's a guide packed with practical advice on demonstrating your patents' value and a list of banks willing to accept them as collateral for loans.

Why Patent-Based Lending Makes Sense

Patent-based lending is a smart move for innovative companies regularly releasing patents or having a strong patent portfolio. Here's why:

1. Leveraging Intangibles: Patents allow businesses to tap into intellectual property as tangible assets for loans, expanding their borrowing capacity.
2. Risk Mitigation: Lenders may view patents as less risky collateral, especially if the products they protect generate income or hold a market-dominating position.
3. Competitive Edge: Patents exhibit a company's innovation as a strategic asset, enhancing its appeal to lenders.
4. Investment Attraction: Using patents as collateral indicates a commitment to innovation, making the company more attractive to future investors.
5. Retain Ownership: Unlike equity financing, patent-based loans provide capital without diluting ownership, which is crucial for maintaining control.
6. Revenue and Defense: Patents can generate income through licensing or offer protection against competition, strengthening the company's financial and market position.

Patent-based lending taps into the value of innovation, offering a smart financing avenue for growth-focused enterprises. However, it requires strategically demonstrating the value of IP.

Strategies to Showcase IP's Worth to Lenders

Detailed revenue sources, market potential analysis, and robust legal strength can help demonstrate your patents' value. Here are four strategies to effectively communicate the worth of your patents to lenders:

1. Revenue Sources: List potential earnings from direct product sales, licensing fees, and royalties if your patent is already tied to a thriving business.
2. Market Potential: Conduct thorough market research, identify the specific market needs, and pinpoint the market potential of your patent, even if it's not yet bringing in revenue or industry attention. This showcases the money-making potential and strategic worth of your patent.
3. Unique Selling Propositions: Detail the unique advantages of your patent compared to existing solutions, illustrating its competitive edge and value proposition.
4. Enforcement Strength: Highlight instances where your patent has triumphed in legal disputes, showcasing its enforceability, infringement victories, or successful settlements and licensing agreements.

By focusing on the potential for future income or the patent's capacity to secure a competitive advantage, you can successfully leverage it for loans. To find the right lender for your needs, refer to the list of top U.S. banks that offer patent-based lending further below.

Leading U.S. Banks for Patent-Based Lending

After analyzing 489,732 patent pledged transactions between June 7, 2015, and June 9, 2021, our research team compiled a list of leading U.S. banks that provide loans on patents as collateral. Here are your go-to choices:

1. JP Morgan Chase
2. Bank of America NA
3. Royal Bank of Canada
4. Silicon Valley Bank
5. Wells Fargo Bank National Association
6. Wilmington Trust NA
7. Antares Capital LP
8. Credit Suisse AG
9. PNC Bank
10. HSBC Bank USA NA
11. Bmo Harris Bank NA
12. Eclipse Business Capital
13. Comerica Bank
14. Morgan Stanley Senior Funding Inc.
15. Barclays Bank PLC
16. Western Alliance Bank
17. Midcap
18. Goldman Sachs Bank US
19. Pacific Western Bank
20. Ares Capital Corp

Source: greyb.com | inquartik.com

Wrapping Up

Neglecting to effectively present your patent's value can lead to loan denials. To help you develop a strong patent portfolio and showcase its worth, we've curated resources covering various topics like patent portfolio management, valuation, and more. Visit our blog for helpful insights and guidance on patent monetization. If you have further questions, feel free to reach out to us. Good luck with your loan application!

1. The staggering rise in intangible assets like patents in the U.S in 2022 indicates their potential as strategic assets for businesses beyond mere legal rights.
2. Innovative enterprises can benefit from patent-based lending by expanding their borrowing capacity, reducing perceived risks for lenders, and demonstrating their commitment to innovation.
3. Successfully securing a patent-based loan can generate income through licensing, protect against competition, and provide capital without diluting ownership.
4. To communicate a patent's worth to lenders, companies should focus on its potential revenue sources, market potential, unique selling propositions, and enforcement strength.
5. A strong patent portfolio can increase a company's appeal to lenders and attract future investors by showcasing its strategic value and innovative edge.
6. A list of leading U.S banks offering patent-based lending includes JP Morgan Chase, Bank of America NA, Royal Bank of Canada, Silicon Valley Bank, and Wells Fargo Bank National Association, among others.

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