It is not uncommon for companies to use their intellectual property (IP) as collateral to secure bank loans. This practice is known as IP financing, and it involves using patents, trademarks, copyrights, or other forms of intellectual property as collateral to secure a loan.
Although this practice has been around for several decades, it has gained increasing popularity in recent years, especially in industries that rely heavily on innovation, and research and development. This is because IP assets can be valuable and can provide lenders with additional security in the event of default.
Undoubtedly, a number of early-stage companies have secured loans with Silicon Valley Bank (SVB) using IP as collateral.
SVB borrowers who leveraged IP assets to secure loans are now in a wait-and-see position, and will need to closely watch to whom their loan is sold. They might want to consider developing a relationship with the new loan holder, so that should their loan come into question, they have a basis from which to discuss the status of their IP, among other loan terms.