Finance for IT and technology businesses
When the main asset is recurring revenue rather than anything physical, funding depends on how convincingly that revenue can be evidenced.
Request a callback- Commonly funded
- Hardware, licences, growth
- Typical facilities
- Asset finance, term loans
- Lender focus
- Contracted recurring revenue
This page describes what businesses in this sector typically fund and what lenders generally look for. It is not a recommendation, and what is available to you depends on your own circumstances.
About it & technology
Technology businesses often have strong economics and almost nothing to pledge. Servers depreciate quickly, software cannot be repossessed, and the genuine value — a contracted subscription base — is invisible on a conventional balance sheet.
Lenders who work in this space have adapted. Contracted recurring revenue is increasingly treated as the security, with facilities sized against monthly subscription income and the rate at which customers renew. For resellers and managed service providers, funding hardware and licence purchases ahead of client payment is a more familiar exercise.
What technology businesses fund
- Servers, networking equipment and end-user hardware, for own use or for clients.
- Multi-year software licences bought up front and recovered monthly.
- Data centre space, racks and infrastructure.
- Hiring engineers and developers ahead of contracted revenue.
- Working capital against subscription and support contracts.
- Acquiring a competitor, a customer base or a managed service book.
What lenders assess
- Monthly recurring revenue and how much of it is genuinely contracted.
- Churn, which matters more to a funder than growth rate does.
- Contract lengths and notice periods on key customers.
- Customer concentration and the credit quality of the largest accounts.
- Gross margin after hosting, licensing and support costs.
Frequently asked
Can I borrow against subscription revenue?
Yes, with the right lender. Facilities sized against contracted monthly recurring revenue are now well established. Funders will want clean reporting on churn and contract terms, and will discount revenue that is rolling monthly rather than committed.
Can I fund licences I buy for clients?
Often, yes. Where you buy a multi-year licence up front and recover it monthly from a client, several funders will finance the purchase so the cash flow mismatch does not sit on your balance sheet. It is a common facility for managed service providers.
You might also want
Tell us what your business does
We will tell you which funders lend into your industry, and roughly what they are likely to say.
