By Morris Zhu
For many innovative companies, the most valuable assets are not factories, machinery, or real estate. They are patents, trademarks, proprietary data, software, and trade secrets.
These assets often define a company's competitive advantage, yet they have historically been difficult to use as collateral when seeking bank financing.
In 2026, China is accelerating efforts to change this reality.
A New Policy Direction for Intangible Asset Financing
China's 2026 Government Work Report emphasized the need to fully leverage the value of data and intellectual property and to strengthen support mechanisms such as performance assessments, financing guarantees, and risk compensation. The objective is clear: encourage financial institutions to provide stronger support to innovation, advanced manufacturing, and small and medium-sized enterprises. The policy elevates intangible asset financing to an unprecedented strategic level, aiming to solve the "lack of collateral" problem for asset-light enterprises.
For businesses whose value lies primarily in technology, branding, or digital resources, this shift is particularly significant.
Rapid Growth in IP-Backed Lending
The market for intellectual property pledge financing has expanded at a remarkable pace.
According to figures released by the National Financial Regulatory Administration, Chinese financial institutions issued RMB 297.9 billion in intellectual property pledge loans in 2025, representing a 56 percent increase compared with 2023. Approximately 28,700 businesses obtained financing through this mechanism.
The number of borrowers grew by 33% year-on-year in 2025. During the 14th Five-Year Plan period, cumulative IP-backed lending exceeded RMB 900 billion, supporting over 110,000 SMEs, evolving from a niche instrument to a mainstream funding source.
These figures indicate that intangible asset financing is moving from a specialized instrument to a mainstream source of capital.
Four Categories of Intangible Assets Now Used as Collateral
China's financing framework now extends well beyond traditional patents and trademarks.
1. Intellectual Property (Most Established)
Including invention patents, utility models, design patents, trademarks, geographical indications, software copyrights, integrated circuit layout designs, and newly recognized data-related IP rights.
Supplement Case: Sichuan's "Zhongjiang Noodles" geographical indication trademark secured over RMB 100 million in credit.
2. Data Assets
Operational, industrial, and supply chain data are increasingly used as collateral, particularly where ownership and commercial value can be demonstrated.
Supplement Case: Shandong Quanxin New Energy obtained a RMB 5 million "Data-to-Gold Loan" using thermal power production data.
3. Trade Secrets
Proprietary algorithms, formulas, manufacturing know-how, and customer information may support lending where confidentiality and value can be substantiated.
Supplement Case: Shanghai Yashu Information Technology received nearly RMB 10 million from Agricultural Bank of China using core trade secrets.
4. Other Intangible Assets
Such as domain names, franchise rights, copyrights, and certain forms of goodwill, may also be considered depending on the nature of the business and the lending institution.
Supplement Case: Guizhou Dongyi Electric secured RMB 93 million using its order-data analysis model as data IP.Government Support Reduces Risk for Banks
Central authorities have introduced interest subsidies and risk-sharing arrangements to reduce lenders' exposure. National guarantee programs may absorb a substantial portion of potential losses, while some local governments provide additional compensation mechanisms.
At the same time, the China National Intellectual Property Administration and the People's Bank of China have streamlined registration procedures through fully digital systems, allowing pledge registrations to be completed much more efficiently than in the past.
As a result, financing costs are lower and approval processes are becoming significantly faster.
Which Businesses Stand to Benefit Most
The expanded framework is particularly advantageous for companies whose core value is based on innovation rather than physical assets.
How the Financing Process Typically Works
Although specific requirements vary among banks, the process generally begins with identifying assets that are valid, enforceable, and free from ownership disputes.
The borrower then submits documentation relating to both the assets and the company's financial condition. The lender evaluates the commercial value and legal status of the intangible assets, often with assistance from specialized appraisal institutions.
Once approved, the parties complete the relevant pledge registration and execute the financing agreement. Funds are then disbursed in accordance with the loan terms.
Strategic Considerations for Rights Holders
Businesses seeking to use intangible assets as collateral should view financing readiness as part of their broader intellectual property strategy.
For multinational groups, it may be worthwhile to assess whether valuable rights should be held by Chinese entities in order to facilitate local financing opportunities.
Looking Ahead
China's 2026 policy initiatives signal a continued expansion of intangible asset financing. More categories of assets are likely to become eligible, procedures are expected to become more efficient, and government support mechanisms may further reduce borrowing costs.
For innovative and asset-light businesses, this trend represents a meaningful shift. Intellectual property is no longer only a defensive legal asset. It is increasingly a practical financial instrument capable of supporting growth.
Companies that proactively manage and document their intangible assets will be best positioned to transform innovation, data, and brand value into working capital in one of the world's most dynamic markets.