High-growth Scottish businesses are set to benefit from a new funding stream, as the Royal Bank of Scotland prepares to launch the country’s first IP-backed loans.

Under the bank’s plans, firms will be able to borrow against the value of their intellectual property, instead of traditional assets like machinery, providing a lifeline for businesses that often struggle to secure loans, particularly in tech and innovation-led sectors.

In a move welcomed by Scottish ministers, RBS will begin rolling out the scheme next year, handing out loans ranging from £250,000 up to a whopping £10 million.

Developed in partnership with IP valuation specialists Inngot, the bank’s new lending strategy follows a change in Scottish law earlier this year, when the Moveable Transactions (Scotland) Act 2023 took effect, allowing lenders to accept IP as loan security.

That might prove a transformative shift for firms in key sectors such as gaming, healthtech, and advanced software – areas seen as vital to Scotland’s innovation economy – which are often IP-rich, but lacking traditional collateral.

“As more companies invest in AI and digital capabilities, we expect to see an increased demand for technology-driven services which may not have the same tangible assets as more traditional businesses,” said Judith Cruickshank, NatWest Group’s Scotland board chair.

RBS’s parent, NatWest Group, already launched IP-backed loans last year, aimed at high-growth businesses in England and Wales. Those loans have provided more than £22million in funding to date for companies specialising in areas like cloud-based software services, smart system technology, and AI gaming platforms.

For instance, Liverpool gaming company Ripstone negotiated a £600,000 finance package using its IP as collateral to support the development of a range of new game projects, while prosthetics firm Open Bionics secured a £600,000 IP-backed loan to open six new clinics in the US.

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RBS said that these successes is proof that the strategy has ‘great potential’ for Scottish firms, from the gaming studios of Dundee to the biotechs of Edinburgh.

“Access to capital is, of course, fundamental to businesses’ growth and the Scottish Government brought forward new legislation in 2023 to enable businesses to use their IP to raise finance in the same way as they use physical assets,” said the deputy first minister, Kate Forbes. 

“It is welcome and exciting to see the Royal Bank of Scotland’s plans for an IP-backed loan, and I look forward to it providing invaluable support to help kick-start the country’s greatest ideas and business innovation.”