Financing a Patent With a Personal Loan

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Updated on Tuesday, December 4, 2018

financing a patent

You just invented what you believe will be “the next big thing.” Perhaps you’ve built a better mousetrap, created a product that is going to revolutionize an industry or just made something fun that is going to bring joy to everyone for years to come — remember the pet rock? Either way, you’ll need to protect your product with a patent.

Investing in a patent application is just as important as investing in the product you created. “The real power in a patent is a negative right, or the power to stop other people from practicing your invention,” says Adam Kelly, partner with Loeb & Loeb LLP in Chicago, who specializes in patent litigation and infringement.

Here’s what you need to know before financing your patent.

Financing your patent with a personal loan

A personal loan can provide you with a lump sum chunk of change to help you finance the cost of a patent. The pros of using a personal loan to finance a patent are obvious: “You will have the money up front to hire a registered patent attorney to draft a thorough patent application,” according to Kelly.

However, personal loans often come with higher interest rates compared to other types of loans, so if you are short on cash now, consider how you are going to be able to pay this loan back later. As Kelly noted, “the cons are that now you have this note that you have to pay at some point, and you need to be able, as a business person, to figure out how you’re going to monetize the invention to pay the money back.”

If you want to use a personal loan to finance a patent, Kelly suggests starting by creating a business plan. Then, do some research on potential lenders.

How to find personal loans for a patent

Before applying for a loan, make sure you know your credit score. You know the old story — the better your credit score, the better your loan. You can see your credit score for free using My LendingTree. If you need to improve your score before applying, you can follow these tips.

Once you’re ready to start shopping lenders, you can use LendingTree’s personal loan tool. By inputting some personal information, you may get to review loan offers from up to five reputable lenders. You could also compare lenders on MagnifyMoney’s personal loan marketplace (MagnifyMoney is a subsidiary of LendingTree).

Finance a Patent with a Personal Loan

Once you’ve narrowed down your options, fill out the paperwork for your personal loan.

Don’t qualify for a loan? Apply for a provisional patent application

If you can’t afford the cost of a patent and don’t qualify for a loan, a provisional application can be your saving grace. Kelly explains that for approximately $400, you can file a provisional application — which means temporary — that holds your place in line for one year.

In the meantime, you can try and raise the funds you need for a full patent application. If your one year is up and you haven’t converted your provisional patent application to a full patent application, you’ll lose your place in line and will need to start over.

Applying for a patent: Filling out your application and costs

The process for obtaining a patent starts with an application that will be submitted to the United States Patent and Trademark Office (USPTO). “This is a legal document that combines patent law with an explanation of the technology underlying the invention,” Kelly says. “It’s one of the most complex legal documents that we have in the United States.”

The type of patent application you’ll need depends on the product you’ve invented. There are three types of patents: design, utility and plant.

Patent typeDescription of patentFiling Fee

Design patent

A design patent covers how a product looks. The length of a design patent is 14 years.


Utility patent

A utility patent protects the way an article is used and works. The length of a utility patent is 20 years.


Plant patent

A plant patent protects new varieties of plants, flowers and seeds. The length of a plant patent is 18 years.


As Kelly explained, the design patent protects the ornamental aspects of your product. “For example, the bug-eyed headlights on a Porsche 911 are covered by a design patent,” he said. “The same with the BMW kidney-shaped grill and the unique shape of a Heineken beer bottle.”

Compare that to a utility patent, which protects the functional aspect of an invention, or how that technology is used; as an example, Kelly noted, “On an iPhone, the round button that you press to use your phone is protected by a utility patent.”

The third patent is for those who create new plant varieties — say, a new corn or soybean seed.

Filling out a patent application

According to Kelly, each patent application requires several components: a description of the problem that the inventor was attempting to solve and the failed solutions to that problem; a description of how the inventor solved the problem and descriptions of the invention itself. The application also requires properly labeled and described drawings.

“Most importantly,” according to Kelly, “at the back of the patent application is the claim, a long run-on sentence which describes the invention.” Kelly also urges every entrepreneur to hire a registered patent attorney to complete the application: “The claim determines the scope of the patent rights that are afforded to the inventor. It takes a very skilled draftsperson to write a patent claim appropriately.”

Once your application is complete, it is filed with the patent office, along with the requisite fees. Then, Kelly says, a patent examiner who has the technical background that matches your invention reviews your application.

Your cost for a patent

Speaking of fees, a patent application can start at just a few hundred dollars, but the investment often comes with a hefty price tag. According to Kelly, entrepreneurs should plan on spending between $7,000 and $15,000 to prepare and file a patent application, which includes the services of a registered patent attorney.

“The fees also range based on the complexity of the invention,” he said. “If you need to hire a registered patent attorney who has a Ph.D in biochemistry, because your application deals with recombinant DNA technology, that’s going to be more expensive.”

Compare that to someone who has just designed a new cardboard coffee cup — according to Kelly, “that invention is pretty low technology and wouldn’t require as much time to put together the patent application.”

Applications can be five pages long or 200 pages long, depending on the invention and complexity of the technology.

“The Patent Office is one of the few administrative agencies of offices in the U.S. government which makes money,” said Kelly, “and that’s because there’s a fee for filing a patent application, a fee for asking for a once-a-year examination process, and even a fee for not meeting deadlines that the examiner will set to the inventor.

When it is time to award the patent, there is a issuance fee and there are maintenance fees so that the patent office will continue to recognize that patent as valid and enforceable.”

Beware submitting a patent application on your own

You can submit a patent application on your own, but this is the riskiest of all of your options. According to Kelly, if you want to do it yourself, you must have a strong familiarity with patent laws and the procedures of the Patent Office, and your application must comply with those procedures and laws. Unless you have a legal and patent background, it’s better to leave this tricky process to the pros.

Do you even need a patent?

Remember: You can’t patent an idea, just your actual invention, but maybe you don’t even need a patent for that either.

“If you discover or create an invention, you need to make a strategic decision as to whether you disclose that invention to the world or whether you keep it secret,” said Kelly. “It could be considered a trade secret, such as the formula for Coca Cola or the recipe for Kentucky Fried Chicken. You can derive proprietary value from a trade secret.”

However, Kelly noted that if the invention can easily be reverse engineered, then patent protection is a must.

The patent application process can take anywhere from one to three years. Once you apply for your patent, you can mark your product “patent pending” and continue to sell it (and hopefully make money) while you wait for an answer.

“The patent pending designation is important for calculating damages later if you sue an infringer, and if you’re successful proving infringement,” said Kelly.

A patent application takes money and time, but it ultimately protects the one thing you have been working on for a long time — your invention.

Fees mentioned above are accurate as of the date of publishing.