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Singapore tech firms can now use patents as collateral for bank loans

Nurdianah Md Nur | April 9, 2014
DBS Bank, OCBC Bank and UOB will start accepting applications from late Q2 this year.

Local tech businesses in Singapore will soon be able to use their granted patents as collaterals for bank loans with the new Intellectual Property (IP) Financing Scheme.

The IP scheme, which will be run by the Intellectual Property of Singapore (IPOS), is a two-year plan that aims to provide businesses with another avenue to access capital to grow their operations.

"There is a growing trend of businesses being valued based on intangible assets," said Indranee Rajah, Senior Minister of State for Law and Education in Singapore. According to a report by Brand Finance, 42 percent of the enterprise value in Singapore was in intangible assets in 2012, up from 35 percent in 2011, she added.

Moreover, by enabling businesses to monetise their patents, the IP Financing Scheme encourages the recognition of IP as an asset class, she said.

Eligible businesses may apply for the scheme through selected participating financial institutions, which currently comprise of DBS Bank, OCBC Bank and UOB, from the late second quarter of this year. Prior to doing so, applicants will need to obtain an IP valuation report from an appointed IP valuer. The approved valuation companies include the American Appraisal Singapore, Consor Intellectual Asset Management, and Deloitte & Touche Financial Advisory Services.

As the move to accept patents as collaterals brings about risks for financial institutions, the Singapore government has set aside $100 million (US$80 million) to co-share the risks. The fund will only be used if a company defaults.

"[The $100 million fund] is a safety net and also a catalyst," said Tan Yih San, chief executive of IPOS, to The Business Times. "We hope to be able to catalyse and encourage the banks to go further to finance the IP-rich companies so that they can also help to grow a lot more like Apple, Samsung and Google as they expand overseas."

One-stop IP service centre
In conjunction with the launch of the IP Financing Scheme, IPOS has officially opened IP 101, a one-stop IP service centre.  

Located at #01-01 of the Manulife Centre on Bras Basah Road, IP 101 will provide a range of IP products and services such as over-the-counter filings of IP and reference check on prior registrations. The centre will also offer complimentary business and legal clinics, as well as advise businesses on the range of IP education and training for professionals that are conducted by the IP Academy.

 

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