Why does a software studio with millions of users still get rejected for a business loan?
It’s a daily occurrence. The creative technology industry is booming… but the lending industry wasn’t built for it. Banks like to see warehouses, equipment and trucks. Creative tech firms have code, brands, data and trained models.
That mismatch costs the sector billions every year.
Great news: Somebody finally realizes there’s a gap. Plus, it’s becoming easier to think smart about funding options.
Here’s what’s coming up:
- The Creative Tech Boom Banks Can’t Read
- What Counts As An Intangible Asset?
- Why Traditional Lenders Keep Saying No
- Where The Money Actually Comes From
- How To Improve Your Funding Odds
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The Creative Tech Boom Banks Can’t Read
Creative technology businesses range from gigantic industries to tiny startups. Game studios. Animation studios. Music production apps. Design platforms. Then there’s a rapidly expanding niche of interactive storytelling apps — character chatbots, virtual girlfriends, and the AI roleplay generators that allow players to create characters, worlds and scenes from scratch.
They are all alike. You cannot put what they own on a truck.
An ai roleplay scene generator has value because of its model weights, its collection of content, its users and its brand. It’s exactly the same story across every corner of the adult creative software market. Established platforms built around AI porn generation run on precisely the same asset base. Trained models. Prompt systems. Moderation tooling. Licensing agreements. Ask a traditional lender to secure a loan with any of that, and you will have had a very brief conversation. There’s nothing to put up as collateral. There’s only value.
And in a credit file, those two things are not the same.
What Counts As An Intangible Asset?
An intangible asset is anything valuable that you can’t physically touch.
For a creative technology business, that usually means:
- Intellectual property — code, characters, model weights and design libraries
- Data — user behaviour, training sets and content archives
- Brand — recognition, reputation and community
- Contracts — licensing deals, distribution agreements and subscription books
This is also not an edge case. Ocean Tomo has been conducting this study for years and finds that intangibles account for 92% of S&P 500 company market value. That’s up from only 17% in 1975.
Read that again.
Nearly all of the wealth in the contemporary economy now exists in assets a bank cannot foreclose on. And almost all lending models still act like it’s 1975.
Why Traditional Lenders Keep Saying No
Collateral Is Still King
Bank lending works on a simple premise. If a borrower defaults, the lender sells the asset and gets his money back.
That works great for an oven-powered bakery. Try running that scenario in a studio whose primary asset is a trained model and a returning audience. If the doors shutter, the audience walks out and your model is now worth pennies on the dollar.
Studies from the Federal Reserve explain why this is so common. Just 42% of applicants were approved for the full amount they requested and inadequate collateral was one of the top reasons applicants got denied.
Valuation Is Genuinely Hard
How do you place a value on a content library? A fine-tuned model? A community of 400K active users?
Ask three valuers one question and you’ll get three wildly different answers. Credit committees loathe uncertainty. If you can’t defend a number on a spreadsheet, the safest option for a loan officer is to always say no.
Revenue Looks Risky On Paper
Creative technology income streams are often subscriptions based, seasonal, or platform specific. One store policy update or payment processor can kill a line of revenue overnight.
Volatility is a risk to lenders. Periodically they won’t have price risk at all.
FYI: Industries that have reputational sensitivities (adult, gambling-related utilities, etc., some generative media products) tend to be rejected at the policy phase, prior to opening financials.
Where The Money Actually Comes From
When banks refuse to lend, entrepreneurial technologists look elsewhere. Here’s where the money’s really going.
Venture Capital (For A Lucky Few)
Equity investors have no problem with intangible value. They’re purchasing upside, not collateral.
The issue is focus. According to an OECD report, AI companies secured 61% of global venture capital in 2025. Great until you realise that billions went to a handful of massive investments. The average mid-tier studio building out an AI roleplay scene generator doesn’t get that invite.
Revenue-Based Financing
Rather than borrowing against assets, these lenders borrow against monthly recurring revenue. Payments adjust up or down with revenue.
It’s quick, it’s flexible and works well for subscription products. Though more costly than a traditional term loan so the numbers need to add up.
IP-Backed Lending
A small, niche class of specialty lenders will lend money secured by registered intellectual property and IP licensing revenue. Rare these days, but will typically want to see well documented/properly registered IP.
Private Credit And Sector Grants
Private credit funds operate at a much quicker pace than banks and look far more commercially at intangible value. Don’t forget public grants and creative industry funds either, particularly if your studio is making original IP.
How To Improve Your Funding Odds
You can’t rewire banks. But you can simplify the underwriting of intangible value.
Document, document, document. Trademark your logo. Copyright your work. Maintain clean contributor agreements so no one can later challenge ownership of the code.
Make revenue boring. Flat, contracted, well-reported revenue is more valuable to a lender than one amazing but uneven year.
Display retention, not only growth. Churn will reveal to a lender if that user base is a true asset or a lucky blip.
Get an arms-length valuation. An independent valuation of your IP gives the credit committee something tangible to point to.
Diversify your distribution. Relying on one platform or processor should set off alarm bells. Additional channels can alleviate perceived risk immediately.
Do those five things and the conversation shifts entirely. Instead of asking a lender to trust a gut feeling, you’re giving them proof.
Bringing It All Together
Creative technology companies are built on assets that lending was never designed to value. Code. Models. Brands. Audiences. They all create massive value… and hardly any of it is captured on a balance sheet.
Until lending models catch up, founders have to work around the gap:
- Understand exactly why the “no” is happening
- Document and register every intangible asset properly
- Look past banks to revenue-based, private and IP-backed finance
- Make the numbers as predictable and boring as possible
The value is real. The paperwork just hasn’t caught up yet.
