UK sets aside £500m guarantee capacity for IP-rich SME lending

The British Business Bank is making up to £500m of existing guarantee capacity available to support lending to intellectual property-rich smaller businesses, as the government seeks to widen access to finance beyond companies with conventional physical collateral.

The capacity will be offered through the bank’s ENABLE Guarantee programme during an initial 12-month period. The government said the measure should increase lending availability, improve pricing and strengthen lenders’ ability to assess companies whose value is concentrated in technology, brands, data or other intangible assets.

Banks and other lenders have historically found IP-led businesses difficult to finance because patents, software and similar assets can be harder to value and realise than property, machinery or receivables. Companies with strong growth prospects may therefore struggle to obtain debt despite having valuable commercial rights.

A government-backed guarantee can reduce part of the lender’s credit exposure, potentially supporting larger or more competitively priced facilities. It does not eliminate the requirement for underwriting, and lenders will still need to assess cash generation, ownership of the intellectual property and the prospects for commercialisation.

The commitment forms part of the government’s one-year update on its Small Business Plan. The report also said almost £120m had been allocated to seven community development finance institutions through the Community ENABLE Funding programme. A second phase is scheduled to open later this year, with an ambition to increase the programme to at least £500m over time.

Community lenders typically serve businesses that cannot meet the criteria of mainstream banks. The government plans to publish a roadmap in early 2027 covering the sector’s funding, operational capacity and the referral of declined borrowers to alternative providers.

The report said the British Business Bank’s overall financial capacity had risen by £10.3bn to £25.6bn. That increase and the expansion of the Growth Guarantee Scheme have already been reported separately, but the dedicated IP and community-finance measures provide a more targeted view of how the additional capacity may be deployed.

The programme could also encourage lenders to develop more sophisticated approaches to intangible collateral, an area that has remained underdeveloped relative to property and receivables-backed finance.