Software and technology companies
Software Company Financing for Hiring, Growth and Acquisitions Without Dilution
Recurring revenue, high gross margin and no machinery to pledge. Lenders have learned to underwrite that, and software development was one of the three industries with the highest average loan amounts in NerdWallet’s 2026 study. These are the products that fit, and how they combine.
What Financing Is Available for a Software Company?
A business line of credit and term loans fit hiring and growth for a firm with a year or more of recurring revenue. Revenue-based financing advances against monthly subscription deposits when speed matters more than price. Receivables financing bridges enterprise customers paying on net-60 or net-90 terms. SBA 7(a) loans fund the acquisition of a competitor, a product line or a book of customers for an established, profitable firm with two years of returns.
Why Software Firms Get Larger Loans Than Most Small Businesses
NerdWallet’s 2026 Small Business Loan Study, built on businesses financed through its Fundera marketplace between July 2024 and June 2025, found manufacturing, construction and materials, and software development had the highest average funding amounts of any industry. The reason is not sentiment about technology. Lenders size an offer on the predictability of deposits, and a software company with annual or monthly subscriptions, low churn and 70-plus-percent gross margin shows exactly the pattern an underwriter wants: the same customers paying the same amounts, month after month, by card or ACH.
The same study found that SBA and medium-term loans delivered the largest average amounts while short-term loans and advances were the most commonly approved. A software firm that qualifies for a term product should take it; an advance sized on Stripe payouts is a tool for a specific gap, not a growth plan.
Which Product Fits Which Problem
| The problem | Product | Why it fits |
|---|---|---|
| Hiring engineers or sales ahead of the revenue they will produce | Business line of credit or term loan | Multi-month spend on multi-year money; draw as the hires start |
| Enterprise customers on net-60 or net-90 invoices | Receivables financing | Advances most of each invoice on issue; underwritten on the customer’s credit |
| Annual contracts invoiced up front, monthly costs in between | Business line of credit | Bridges the months between renewal cycles; repay at each renewal |
| A cash gap that has to close this week | Revenue-based financing | Sized to monthly subscription deposits; funds in 24 to 48 hours; refinance once a term product closes |
| Buying a competitor, a product line or a customer book | SBA 7(a) loan | Ten-year terms, no real estate needed, working capital can be included |
| Bridging to a funding round without giving up equity now | Term loan or line of credit | Non-dilutive; repaid from the round or from revenue |
No Hard Assets: What Lenders Read Instead
Equipment financing has nothing to secure in a software company, so the file is underwritten on cash flow and on the quality of the revenue. Underwriters read the business bank statements for deposit consistency, the payment-processor statements for subscription volume, the customer list for concentration, and, for term products, the last two years of tax returns and a current profit-and-loss statement. Monthly recurring revenue, annual recurring revenue, gross and net churn and gross margin are the four numbers that move an offer; a one-page summary of them alongside the statements is worth more than a pitch deck.
Two things hurt a software file more than in other industries. Customer concentration, where one client is more than a quarter of revenue, narrows the lender pool. And deposits that arrive through a processor but net out to a small margin after hosting, payment fees and contractor costs will be sized on the net, not the gross.
Acquisitions: the SBA Route for Established Firms
The SBA approved 77,600 7(a) loans for $37 billion in FY2025, an average of roughly $477,000, and 7(a) is the standard route for a profitable software firm buying a competitor or a book of customers. The loan can run ten years, does not require real estate, and can include working capital for integration. Lenders want two years of business tax returns, a current P&L, the target’s financials, a purchase agreement, and an equity injection that is usually around ten percent on a change of ownership. A firm that is growing but not yet profitable on paper will usually be steered to a term loan or a line instead, sized on revenue rather than on net income.
What a Software Company File Needs
- Three months of business bank statements; six or twelve if revenue is growing fast, so the trend is visible.
- Payment-processor or billing-platform statements showing subscription volume and churn.
- A one-page revenue summary: MRR or ARR, gross margin, churn and the top five customers by share of revenue.
- Two years of business tax returns and a current P&L for any term, SBA or acquisition request.
- Every open position, including venture debt, convertible notes, existing lines and any advance.
One application covers every product in the network. Check your options — about five minutes, three months of statements, and a soft inquiry only.
Common Questions
Can a software company get financing without collateral?
Yes. Lines of credit, term loans, revenue-based financing and receivables financing are underwritten on cash flow and revenue quality rather than on hard assets. A personal guarantee is standard on most products; a blanket lien on business assets is common on term products.
Do lenders count annual contracts invoiced up front as revenue?
They count the deposits when they arrive, which is why annual billing can make a file look lumpy. A line of credit is the usual answer, and a schedule of contract renewal dates helps the underwriter read the pattern.
Is revenue-based financing the same as venture debt?
No. Venture debt is a term loan to a venture-backed company, usually with warrants. Revenue-based financing through the RAN Funding network is an advance sized on monthly deposits, repaid as a fixed share of revenue, with no equity component and no requirement to have raised a round.
What are the minimum requirements?
For revenue-based products through RAN Funding: about twelve months of revenue deposited into a business bank account, consistent deposits, a credit score from 500, and the last three months of business bank statements (four in some states). Every product starts at $10,000. Lines of credit typically want a year in business and a 650+ score; term loans and SBA want two years, good credit and full financials.
How fast can a software company be funded?
Revenue-based financing commonly funds within 24 to 48 hours of a signed offer. Receivables facilities and lines of credit take days to open; term loans about a week; SBA acquisition loans take weeks.
Sources
- 2026 Small Business Loan Study — NerdWallet, 2026 (Fundera marketplace data, July 2024 to June 2025)
- SBA Delivers Record Capital to Small Businesses in FY25 (News Release 25-83) — U.S. Small Business Administration, 30 September 2025
- 7(a) & 504 Activity Reports: FY2025 Year End — U.S. Small Business Administration, FY2025 year-end data
- 2026 Report on Employer Firms: Findings from the 2025 Small Business Credit Survey — Federal Reserve Banks, 3 March 2026
See What You Qualify For
One application, about five minutes, soft pull only. A funding specialist comes back with the offers you qualify for — and explains every term before you sign.
Financing That Fits This Situation