Using copyright as collateral to take a facility loan in the bank

In South Africa, savvy creators have been using their copyrights as collateral for bank loans. How? By demonstrating a steady stream of royalty income from record labels, music publishers, or collection societies. Armed with this proof of earnings, often with their manager by their side, they’ve successfully secured loans by showing banks their track record of revenue generation.

This practice is also why you read stories in the music industry about massive investments like Sony's rumored $1 billion acquisition of Queen’s catalog. Why is it valued so highly? Because there’s a clear history of consistent earnings. Think about it—if you’re an employee and don’t keep track of your pay stubs, how would you convince even a loan shark to lend you money, let alone a bank? It all boils down to record-keeping and doing the behind-the-scenes work.

Being an artist isn’t just about nailing that perfect beat or owning the stage; it’s about managing the business side, too. Many of today’s global superstars have paid their dues so you can benefit from their experience. Now, it’s up to you to do the same.

In Kenya, there’s already a legal framework in place—the Movable Securities Properties Act—that recognizes intellectual property as collateral for bank loans. So, in theory, artists can leverage their copyrights to secure financing. However, despite the law being there, I have yet to see it put into practice. To my knowledge, no bank or institution has started offering loans to artists based on their copyright assets.

One of the challenges brought up is how to accurately value intellectual property like songs or albums. If an artist approaches a bank with 30 albums, how do you even begin to assess their worth? How do you translate that value into a loan amount? It’s a question that’s still waiting for a practical solution.