Asset manager pushes pension-led business funding
Pension specialist claims intellectual property-based pension-led funding could realise an estimated £100bn of finance.
More than a quarter of owners of small and medium-sized enterprises would turn to IFAs to discuss business funding yet most remain unaware they can source finance directly through their pension funds, data from Clifton Asset Management has revealed.
The figures revealed 73 per cent of UK SME owners are unaware of pension-led business funding.
This is particularly true for smaller businesses and those founded after 2000.
According to Clifton, intellectual property-based pension-led funding could deliver a boost to SMEs currently struggling to source funding.
Intellectual property is any intangible asset that consists of human knowledge and ideas including patents, copyrights, trademarks and software.
In 2010, UK royalty and licence fees generated £5.25bn and the vast majority of business assets now reside in IP – a fact reinforced by a recent government report aimed at helping SMEs get value from IP.
Clifton claims that, in combination, IP-based pension-led funding could realise an estimated £100bn of finance. The data showed that 84 per cent of businesses value their IP at zero, however, IP can contribute significant business value.
Despite changes in the Finance Act 2004, which led to IP being recognised as an acceptable asset class for use in pension-led business funding, this appears to have been a secret well-kept.
Many SME owners have pension assets and, for this group, these funds can often be released – commonly through the purchase or lease-back of independently valued IP.
Adam Tavener, chairman of CAM, said: “Almost half of the business owners we spoke to were unsure or unaware of the suitability of IP as an asset for funding, particularly in the arts and leisure sector.
“Yet it could be the small business sector’s salvation at a time when traditional funding sources are proving extremely difficult to access.
“It is a matter of educating business advisors, including banks, that this type of funding can put their clients back in control of their own business financing. It is not an either/or and the banks and other funders are gradually recognising the benefits of pension-led finance.”