As small businesses have struggled to raise sufficient capital for loans, central government has begun to encourage the use of intangible assets for loan collateral. The promotion is primarily focused in Ningbo, a major Chinese city. This development may prove to be a catalyst for currently credit-starved small businesses to increase credit and business development. Naturally this encouragement will accelerate the process of Chinese businesses using intellectual property (IP) as an intangible asset, in turn legitimising the nation’s IP system. This is especially important given the current strain between Chinese and US government, specifically in regard to current Chinese IP protection. This strain between the two powers has contributed to the slowing down of the Chinese economy, perhaps prompting the government’s encouragement of intangible IP such as trademarks and patents for collateral. The encouragement does not stop at IP assets however, even sewage draining permits are suggested as a new form of collateral for bank credit. Government initiatives in this area are not new, previous attempts to stimulate growth has included, the encouragement of large banks to provide more financial support for small companies. However, presently, the financial difficulties facing small businesses have not been improved, as per a report by the top Chinese auditor. Problems include the reliance and insistence of banks for “hard assets” as collateral, as opposed to “soft” IP based sources. A squeezing of the shadow banking sector has also restricted credit poor business securing alternative loans. It must be noted that using IP assets as collateral is not without difficulties. Firstly, unlike “hard” assets, patents and trademarks have no fixed value. Furthermore, transferring ownership of such assets requires significant paperwork and time, unlike conventional sources of collateral. Given these current limitations, it is unsurprising that encouragement has come from government, rather than been proactively pursued by large banks. Remedies are not immediately obvious to these problems. Wang Xiao, head of Bank of China’s Ningbo branch, recommended that a government panel of IP experts would be beneficial, to help value assets, as well as to help consider the type of assets that would be easily liquidated if there were a default on a loan. Whilst the problems of IP collateral and significant investment needed to support such a system, encouragement of its use as collateral will only strengthen current IP industry and its regulation.