Technology and SaaS finance

Growth capital that lends on your recurring revenue, not your fixed assets

Software and IT services businesses build value in contracts, code and customers, which most banks cannot see on a balance sheet. We present your ARR, retention and unit economics to lenders who underwrite them, so you can fund growth or an acquisition with less dilution than another equity round. On buy-and-build and buyouts we act as debt adviser and run the whole process.

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No credit search and no upfront fee.

facility sizes: £200k to £100mfacility sizes
on acquisitions: Up to 5x EBITDAon acquisitions
of ARR for SaaS and recurring revenue: Up to 70%of ARR for SaaS and recurring revenue
over Bank Rate: From 2.5%over Bank Rate

We fundB2B SaaSSoftware and platformsIT services and MSPsCyber securityFintech and dataTech-enabled servicesTelecoms and connectivity

The challenge

Why tech businesses struggle with traditional lenders

A high-growth software company can be worth many times its revenue and still be turned down for a modest bank loan. Conventional credit models look for historic profit and hard security, and fast-growing tech businesses rarely have either.

No hard assets to secure against

Value sits in code, IP and customer contracts. With no property, stock or plant, a bank's standard security tests leave little to lend against.

Growth means losses on paper

Investing ahead of revenue in sales, marketing and engineering produces EBITDA losses, even when each customer is profitable over its lifetime. Profit-based lenders stop there.

Equity is expensive dilution

Raising another equity round to bridge to the next milestone can give away a large slice of the business at a valuation the founders know will look low in two years.

R&D tax credits arrive late

Claims are filed after the year end and paid months later, so cash spent on development in January may not come back for well over a year.

Annual billing makes cash lumpy

Upfront annual contracts help, but monthly and quarterly billing, long enterprise sales cycles and implementation fees make working capital hard to predict.

Buy-and-build needs acquisition debt

IT services and MSP consolidators grow by buying smaller firms, and each deal needs funding that recognises the recurring contract base being acquired.

How we structure it

How we structure technology funding

The right mix depends on the stage of the business, how recurring the revenue is and whether there is an equity investor alongside. Most deals we arrange use one or two of these.

Recurring revenue finance

A term loan sized as a multiple of contracted ARR or MRR rather than EBITDA, for SaaS and subscription businesses with strong retention. Often interest-only for the first year.

Up to 70% of ARR, from £200k, 3 to 5 years

Venture debt

Debt raised alongside or shortly after an equity round to extend runway and reach the next milestone with less dilution. Usually carries a small warrant over shares.

Often 25% to 50% of the last equity round, 3 to 4 years

R&D tax credit advance

A separate short-term advance against the expected value of your R&D tax claim, repaid when HMRC pays out. Some lenders will advance quarterly as development costs are incurred.

Typically up to 80% of the expected claim, from £100k

Acquisition finance and debt advisory for buy-and-build

Senior, stretch senior or unitranche debt to buy MSPs, IT services firms and software competitors, sized on the combined recurring contract base and EBITDA, with an acquisition line for later bolt-ons. We run the debt process end to end.

£200k to £100m, up to 5x EBITDA on acquisitions, up to 7 years

Invoice finance or revolving credit facility

For IT services, consultancy and resellers billing businesses on contract: invoice finance releases cash from eligible invoices as soon as they are raised, or a committed RCF moves with billing.

Up to 90% of eligible invoices, or an RCF from 2.5% over Bank Rate, 3 to 5 years

Senior term loan or Growth Guarantee Scheme loan

For profitable software and IT businesses: a cash-flow term loan for hiring, product or market expansion, secured or unsecured, with a government guarantee where security is light.

From 6.5% a year or 2.5% over Bank Rate, up to 4x EBITDA, unsecured up to £2m, 1 to 10 years

Example structure

An example technology structure

A B2B SaaS business selling compliance software to mid-market firms had £6.2m of ARR growing at 38% a year, net revenue retention of 114% and gross margin of 81%. It was EBITDA negative by design, had 14 months of runway and wanted to accelerate sales hiring without raising a new equity round at a discounted valuation.

Why it worked

The facility extended runway past 30 months and funded the sales hires in full, with a modest warrant in place of a priced equity round. Covenants were set on minimum ARR and cash rather than EBITDA, so investment in growth did not trigger a breach.

Indicative structureIllustrative

Recurring revenue term loan at 65% of ARR, 4 years, 12 months interest-only: £4m
Accordion option for a further tranche once ARR passes £8m: £2m
R&D tax credit advance against the current-year claim: £380k

£4.38m drawn at completion, with £2m more committed on growth

Illustrative example. Facility sizes, warrants, pricing and covenants depend on revenue quality, retention data, cash runway and the lender's credit assessment.

Through a lender's eyes

What lenders look at in a technology deal

Recurring revenue lenders underwrite the quality and predictability of revenue. We set out each of these clearly in the credit paper we write, with the cohort data behind them.

ARR and growth rate: Contracted annual recurring revenue, how fast it is growing and how much is genuinely recurring rather than one-off services or implementation fees.
Net revenue retention and churn: Revenue kept from existing customers after churn, downgrades and expansion. Retention above 100% tells a lender the base grows even without new sales; logo and revenue churn are tracked by cohort.
Gross margin: Software businesses typically run 70% or more after hosting, support and third-party licences. Lower margins suggest a services-heavy model and reduce the multiple a lender will lend at.
CAC payback and unit economics: How many months of gross margin it takes to recover the cost of winning a customer. A short, stable payback shows that growth spending is efficient and can be slowed if needed.
Cash runway and burn: Months of cash at current burn, and how the loan extends it. Lenders want to see the business reaching break-even, or its next funding event, with comfortable headroom.
Rule of 40: Revenue growth rate plus EBITDA margin. A score at or above 40 signals a healthy balance between growth and efficiency, and lenders use it as a quick check on quality.
Customer concentration and contracts: No single customer dominating revenue, contract lengths and renewal terms, and clean ownership of the IP being developed.

What it is for

How technology and saas businesses use the funding

Hiring sales, marketing and engineering teams
Extending runway to the next milestone or equity round
Bridging R&D tax credit receipts
Acquiring MSPs, IT services firms or software competitors
Funding international expansion
Buying out a shareholder or investor
Funding a management buyout
Smoothing cash flow from monthly and quarterly billing

What we will ask for

Enough to get you indicative terms. Share it securely through your client account; nothing needs to be perfect first.

Two to three years of filed accounts
Current-year monthly management accounts
Monthly ARR or MRR bridge (new, expansion, contraction and churn) for at least 12 months
Customer cohort and retention data
Top 20 customer list with contract values and renewal dates
A 24-month financial model showing cash runway
Cap table and details of the latest equity round
Recent R&D tax claims and HMRC correspondence, if relevant
Letters for any existing debt facilities

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How it works

From first call to funds

1Day 1
Tell us about the business
A call about your revenue model, growth plan and what the money is for. We look at your ARR bridge and retention early so the facility size we discuss is realistic.
2Days 2 to 7
Credit paper and lender shortlist
We write up your metrics the way a recurring revenue lender reads them and approach lenders with appetite for your stage, from venture debt funds to growth lenders.
32 to 5 weeks
Indicative terms and due diligence
We compare term sheets with you, including warrants and covenants. The chosen lender reviews your data room and usually meets the management team.
45 to 10 weeks
Facility live
Legal documents agreed and funds drawn, with reporting set up on the metrics that matter to the lender.

Debt finance for SaaS and technology businesses

For most of the last decade, growing technology businesses had two choices: raise equity or wait until they were profitable enough for a bank. That has changed. A specialist market of recurring revenue lenders, venture debt funds and growth credit providers now lends to software and tech-enabled businesses on the strength of their revenue, retention and unit economics rather than historic profit or hard assets.

Used well, debt lets founders and investors reach the next milestone with less dilution, fund an acquisition without a new round, or buy time to raise equity on better terms. Used badly, it adds fixed repayments to a business whose cash burn is not under control. The skill is matching the right structure to the stage of the business, and presenting the metrics in the way a credit committee expects.

How SaaS revenue based lending works

Recurring revenue finance, sometimes called ARR lending or SaaS revenue based lending, sizes a term loan as a multiple of contracted annual recurring revenue. We arrange facilities of up to 70% of ARR, sized on growth, retention, gross margin and how close the business is to break-even. Facilities usually run for three to five years, often with an interest-only period at the start.

Because the loan is underwritten on revenue rather than profit, covenants are set on measures such as minimum ARR, minimum cash or months of runway, rather than EBITDA. That allows the business to keep investing in growth without tripping a test designed for mature companies.

Revenue based finance versus recurring revenue loans

The terms are often used interchangeably, but they are different products. Revenue based finance is usually a short advance repaid as a share of monthly revenue, best for smaller businesses funding marketing. A recurring revenue term loan is larger, longer and priced more like senior debt, and suits businesses with £2m or more of ARR and established retention.

Warrants and pricing

Recurring revenue lenders and venture debt funds often take a small warrant, a right to buy a minority shareholding at a set price, alongside interest and fees. Warrants are negotiable, and we compare the true cost of each offer including them, so the board can weigh debt against equity on a like-for-like basis.

Venture debt alongside equity

Venture debt is designed for businesses backed by venture capital or growth equity. It is typically raised alongside or shortly after a round, sized at around 25% to 50% of the equity raised, and used to extend runway by six to twelve months. Lenders rely heavily on the quality and commitment of the equity investors, so timing matters: the best terms usually come while the round is fresh and cash is strong.

R&D tax credit advances

Most software businesses carry out qualifying research and development, and the claim can be a meaningful source of cash. The problem is timing, because the claim is filed after the year end and paid some months later. An R&D tax credit advance lends against the expected claim, typically up to 80% of its value, and is repaid when HMRC pays. Lenders will want to see a track record of successful claims and a reputable adviser preparing the current one.

Acquisition finance for MSPs and IT services

Managed service providers and IT services firms are among the most active acquirers in the UK lower mid-market. Their contracted monthly support and licensing revenue is predictable, which makes it well suited to acquisition debt. Lenders will lend up to 5x combined EBITDA on acquisitions for a buy-and-build platform, in senior, stretch senior or unitranche structures, with a revolving or accordion element so later bolt-ons can be funded without starting again.

Lenders will look at the share of revenue that is genuinely recurring, contract lengths and notice periods, customer concentration and how acquired businesses are integrated. A clear integration track record often improves the terms on each subsequent deal. We advise on the transaction and run the debt process end to end, from the information memorandum and lender process to term sheets and completion, for acquisitions, MBOs, MBIs and recapitalisations.

Invoice finance for IT services and consultancies

Not every technology business is a SaaS company. IT services firms, consultancies, resellers and systems integrators often bill other businesses monthly or on project milestones under signed contracts, and that debtor book can support invoice finance. A confidential facility releases up to 90% of eligible invoices as soon as they are raised, with funds within 24 hours of invoicing, so cash keeps pace with headcount and billing as new contracts land. Milestone billing and software licence resale need careful review, but specialist lenders on our panel fund both regularly.

Covenants and reporting

The covenant package is where many technology debt deals succeed or fail over their life. Growth lenders typically test minimum ARR, minimum cash or months of runway, and sometimes a revenue growth floor, reported monthly or quarterly. Covenants set too tightly can force a business to slow hiring at the wrong moment, while loose ones usually cost more in pricing or warrants.

We negotiate covenants against your own forecast, with headroom for the plan to slip, and make sure reporting uses metrics you already track. Agreeing what happens if a test is missed, before signing, is part of choosing the right lender.

What makes a technology deal fundable

Many growing businesses track these metrics in a slightly different way from how lenders want to see them. We help restate them consistently, write a credit paper that tells the growth story with evidence, and run a competitive process so you can compare structures, warrants and covenants side by side.

Monthly management accounts that reconcile to the filed accounts
A clean ARR or MRR bridge, separating recurring revenue from services
Cohort data showing retention and expansion over time
A financial model that shows runway honestly, with and without the loan
Clear IP ownership and customer contracts
Up-to-date HMRC, including PAYE and VAT

Talk it through

Tell us what you need and we will come back with an indicative structure, usually within a few working days.

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FAQs

Technology and SaaS finance questions

Can a loss-making SaaS company borrow?

Yes, if revenue is recurring, retention is strong and there is enough cash runway. Recurring revenue lenders underwrite ARR and unit economics rather than profit, with covenants set on revenue or cash instead of EBITDA.

How much can we borrow against our ARR?

Up to 70% of annual recurring revenue. Faster growth, net revenue retention above 100%, high gross margins and a clear path to break-even push the facility towards the top of the range; high churn or services-heavy revenue pulls it down.

What is the minimum ARR for recurring revenue finance?

Most recurring revenue term lenders look for at least £1m to £2m of ARR with a year or more of retention data. Smaller businesses may be better suited to revenue based finance or an R&D tax credit advance.

Will a lender want warrants or equity?

Venture debt and many recurring revenue lenders ask for a small warrant. Others price without one. We compare the full cost of each offer, including warrants, so you can decide what suits the business.

Can you fund an MSP or IT services acquisition?

Yes. We arrange senior, stretch senior and unitranche debt from £200k to £100m for single acquisitions and buy-and-build strategies, at up to 5x combined EBITDA, often with an accordion for future bolt-ons. As debt adviser we run the whole lender process for you.

We are profitable. Can we borrow on EBITDA instead of ARR?

Yes. Profitable software and IT services businesses can raise senior term loans at up to 4x EBITDA, priced from 6.5% a year or 2.5% over Bank Rate, over 1 to 10 years, unsecured up to £2m. Growth Guarantee Scheme loans go up to £2m per business group where security is light.

Do we need an equity investor to get venture debt?

Venture debt is designed for VC or growth equity backed businesses. Founder-owned businesses with strong recurring revenue usually look at recurring revenue finance instead, which does not need an institutional investor.

How long does it take?

Indicative terms usually within one to two weeks. Due diligence on revenue data and legal documents typically takes another four to eight weeks. A well-organised data room is the biggest single factor in speed.

Related industries

Fund your next stage of growth with less dilution

Send us your latest accounts and ARR bridge and we will come back with an indicative structure, usually within a few working days.

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