SBA lenders approved 195 7(a) loans to security systems services companies between October 2023 and June 2026, $86,180,100 from 66 lenders. The median loan was $200,000, above the national $150,300, and 23 loans (11.8%) were $1 million or more. The median rate was 10.25%, level with the national median. Lenders underwrite these companies on their recurring monitoring revenue: how much there is, how fast customers cancel, whether the contracts can be assigned, and whether cash flow after installation costs covers the payments.
| Measure | Security Systems Services (except Locksmiths) | All industries |
|---|---|---|
| SBA 7(a) loans approved | 195 | 162,355 |
| Median loan | $200,000 | $150,300 |
| Middle half of loans | $100,000 – $500,000 | $50,000 – $500,000 |
| Loans of $1 million or more | 11.8% | 12.9% |
| Median rate at approval | 10.25% | 10.25% |
| Middle half of rates | 9% – 11.4% | 9.3% – 11.25% |
| Acquisitions (change of ownership) | 9 (4.6%) | 16,849 (10.4%) |
| Median acquisition loan | $961,700 | $693,000 |
| Lenders that made these loans | 66 | 1,648 |
| SBA 504 loans (real estate, equipment) | 7 | 16,714 |
Approvals FY2024 – FY2026 to date (1 Oct 2023 – 30 Jun 2026), cancelled loans excluded. Source: SBA 7(a) and 504 FOIA loan records, as of June 30, 2026.
- SBA 7(a) loans approved
- 195 (Oct 2023 – Jun 2026)
- Lenders that approved one
- 66
- Median loan
- $200,000 (national $150,300)
- Median rate at approval
- 10.25% (national 10.25%)
- Loans of $1 million or more
- 23 (11.8%)
- Acquisitions
- 9 loans, median $961,700 at 8.5%
Larger loans than the national median
Security systems services (NAICS 561621) covers companies that sell, install, service and monitor alarm, video, access-control and fire systems; locksmiths and guard companies are classed elsewhere. From FY2024 through June 2026 the industry took 195 SBA 7(a) loans worth $86,180,100 from 66 lenders. The loans ran large: a median of $200,000 against the national $150,300, a middle half from $100,000 to $500,000, a top tenth starting at $1,140,200, and 23 loans (11.8%) of $1 million or more. Start-ups were just 2.6% of loans. Lenders are financing established companies with contracts in place, not new ventures.
| Figure | Security systems | What it signals |
|---|---|---|
| Median loan | $200,000 | Above the national $150,300 |
| Middle half of loans | $100,000 to $500,000 | Growth, refinancing, account purchases and working capital |
| Top tenth | $1,140,200 and up | Acquisitions and larger integrators |
| Median rate | 10.25% (middle half 9% to 11.4%) | Level with the national median, with a low bottom quartile |
| Fixed-rate share | 22.1% | A sizable minority lock in their rate |
| Acquisitions | 9 loans (4.6%), median $961,700 at 8.5% | Fewer than the national 10.4%, large and cheap |
| Start-ups | 2.6% of loans | Almost all established companies |
| SBA Express | 43.1% of loans | Smaller needs on the lender's own credit process |
| SBA 504 | 7 loans, median $636,000 | A few firms buying offices, warehouses or monitoring centers |
What lenders are really underwriting: the monitoring book
An alarm company earns in two very different ways. Installation is project revenue: it arrives once, carries equipment and labor costs, and has to be won again. Monitoring and service contracts renew every month, often for years. Lenders value the second far more than the first, and the most useful thing a security company can do for its file is separate them.
| Revenue | How a lender reads it | What it wants to see |
|---|---|---|
| Residential monitoring | Recurring, but small accounts cancel when people move | Monthly recurring revenue by month, and cancellations by month |
| Commercial monitoring and service contracts | Recurring and stickier; larger accounts | Contract terms, renewal history, concentration in the largest accounts |
| Residential installation | One-off; often sold at a loss to win the monitoring contract | What it costs the company to add a subscriber |
| Commercial and integration projects | Lumpy project revenue with receivables and retainage | Backlog, margins by job, and an aging of receivables |
| Third-party monitoring for other dealers | Recurring, but tied to other companies' books | Which dealers, and their contract terms |
Cancellations, called attrition, are the key number. A book of monitoring contracts that loses few accounts is a durable stream a lender can lend against for ten years; one that churns needs constant installation spending just to stand still. Lenders also ask whether monitoring is done in-house or through a third-party central station, and whether the monitoring contracts can be assigned to a lender or buyer. See lending on run-rate earnings.
A month-by-month schedule of recurring revenue, additions and cancellations for the last two or three years is the heart of a security company's file.
Why these loans price at the national median
The median rate was 10.25%, the national median, but the middle half reached down to 9%, and acquisitions priced at a median of 8.5%. Loan size explains much of it. SBA caps variable 7(a) rates at the base rate plus 3% above $350,000, against plus 6% from $50,001 to $250,000, and at least a quarter of security loans were $500,000 or more, in the tightest tier. A documented monitoring book may help as well, because it gives the lender comfort that the payment is covered by revenue already under contract. And 22.1% of loans carried a fixed rate, which suits a business whose revenue is itself steady. See fixed vs variable rates and SBA loan rates.
Buying a company, or buying accounts
Only 9 loans (4.6%) financed a change of ownership, against the national 10.4%, but at a median of $961,700 they were large, and priced at a median of 8.5%. Security companies also grow by buying blocks of monitoring accounts from other dealers, which is an asset purchase rather than a change of ownership of the company. Either way, most of the price pays for intangibles, the contracts and the customer relationships, and the lender will apply SBA's acquisition rules as they fit the deal.
- Valuation. Where the amount financed, less appraised real estate and equipment, exceeds $250,000, SBA requires an independent business valuation, and the loan for the purchase cannot exceed it. See the SBA valuation requirement.
- Attrition protection. Account purchases often hold back part of the price against accounts that cancel after closing. SBA prohibits an earnout to the seller, so any holdback needs the lender's sign-off that it is not an earnout in another form. See escrows and holdbacks.
- Equity. For a complete change of ownership, at least 10% of total project costs, of which a seller note can supply up to half only on full standby for the life of the SBA loan.
- Contract consents. Monitoring contracts, central station agreements and dealer agreements may need consent to transfer. See change-of-control consents.
- New rules from 1 October 2026. Under SOP 50 10 8.1, every change of ownership needs financial due diligence, a quality of earnings report is required on acquisitions of $3 million or more excluding real estate, and the deal must show 1.25x debt service coverage on historical results.
The seller of a security company is often the license holder and the face to commercial clients. The seller may consult for up to 12 months after a complete change of ownership, and from 1 October 2026 up to 24 months, but may not stay as an owner, officer or employee. A buyer should plan how licenses and key relationships move before closing.
Licenses, liability and key people
Many states license alarm contractors, and the license often sits with a qualifying individual rather than the company. If that person is the owner who is selling, or the one technician who holds it, the lender will ask what happens if they leave. Lenders also ask about liability insurance, fire-alarm certifications for commercial work, and technician retention in a tight labor market. Where the business depends on one person, a lender may require key person life insurance.
Every owner of 20% or more personally guarantees an SBA loan. The company's hard collateral is usually modest: vans, tools, some inventory and receivables from commercial jobs. The contracts themselves have real value to a buyer, which is why an established monitoring book can support a loan larger than the physical assets suggest.
Working capital, advances and preparing the file
Commercial integration work ties up cash in equipment and labor before the customer pays, and retainage can hold back part of each invoice. Some security companies have covered that gap with merchant cash advances. SBA will not refinance an active advance; from 1 October 2026 one becomes eligible only after conversion to a term loan that has amortized for at least 24 months with no new advance since. See refinancing cash advances for security companies and MCA refinancing.
SBA's standard file applies: business tax returns for 2–3 years, P&L, balance sheet and year-to-date P&L, a debt schedule with copies of notes being refinanced, personal tax returns and a personal financial statement for each owner of 20% or more, and optionally bank statements, a use-of-proceeds narrative and the owner's resume. Add the recurring revenue schedule with additions and cancellations, sample monitoring contracts, the central station agreement, license copies, and a receivables aging for project work.
Transparent builds that into a full lender package — financing model, lender presentation, blind teaser and underwriting memo — in a day, with the recurring revenue laid out the way underwriters read it, and takes it to the 278 lenders in its book that write SBA 7(a) and 504. On SBA loans the lender pays Transparent, not the borrower. See the package.
Common questions
- Will an SBA lender lend against my monitoring contracts?
- Not as collateral in the way a building is, but recurring monitoring revenue is what supports the cash flow a lender underwrites. A steady, well-documented book with low cancellations can support a larger loan than the company's physical assets would.
- Can I use an SBA loan to buy a block of alarm accounts?
- Yes, usually as an asset purchase. The lender applies SBA's acquisition rules as they fit the deal, so expect questions about the value of the accounts and the history of cancellations, and any attrition holdback must not work as an earnout, which SBA prohibits.
- What rate do security companies pay on SBA loans?
- The median rate at approval was 10.25%, level with the national median, with the middle half between 9% and 11.4%. Acquisitions had a median rate of 8.5%, and 22.1% of loans carried a fixed rate.
- Does it matter who holds the alarm license?
- Yes. Where the license sits with an individual, the lender will ask what happens if that person leaves. In an acquisition, plan how the license transfers before closing.
- Why do lenders ask for cancellations by month?
- Because attrition determines how long the recurring revenue lasts. A book that loses few accounts can carry a ten-year loan; one that churns needs constant installation spending just to hold its size.