Between October 2023 and June 2026, 61 lenders approved 175 SBA 7(a) loans to software publishers, $79,812,000 in total. The median loan was $150,000, level with the national $150,300, at a median rate of 10.5% against 10.25% nationally. No software publisher used SBA 504. Acquisitions were 5.7% of loans, below the national 10.4%, at a median of $1,230,000. SBA lenders underwrite software on historical cash flow and the owners' guarantees: recurring revenue helps, but only once it shows up as earnings that cover the payments.
| Measure | Software Publishers | All industries |
|---|---|---|
| SBA 7(a) loans approved | 175 | 162,355 |
| Median loan | $150,000 | $150,300 |
| Middle half of loans | $99,000 – $466,750 | $50,000 – $500,000 |
| Loans of $1 million or more | 10.3% | 12.9% |
| Median rate at approval | 10.5% | 10.25% |
| Middle half of rates | 9.75% – 11.5% | 9.3% – 11.25% |
| Acquisitions (change of ownership) | 10 (5.7%) | 16,849 (10.4%) |
| Median acquisition loan | $1,230,000 | $693,000 |
| Lenders that made these loans | 61 | 1,648 |
| SBA 504 loans (real estate, equipment) | — | 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
- 175 from 61 lenders (Oct 2023 – Jun 2026)
- Median loan
- $150,000 (national $150,300)
- Median rate at approval
- 10.5% (national 10.25%)
- Acquisitions
- 10 loans (5.7%), median $1,230,000
- SBA 504
- None
- Start-ups
- 6.3% of loans
What software publishers borrowed
Software publishers (NAICS 513210) develop and sell their own software: subscription products delivered over the internet, licensed applications, and the maintenance and support that go with them. Firms that write code to a client's order sit in a different code; see custom computer programming services. The software publishers that borrowed under SBA were small teams, with a median of 4 jobs supported.
| Aspect | Software publishers | Reading |
|---|---|---|
| Size | Median $150,000; middle half $99,000 to $466,750; 90th percentile $994,000 | A quarter of loans were $99,000 or less; three quarters were larger |
| Large loans | 18 loans (10.3%) of $1 million or more | Where acquisitions and larger working-capital needs fall |
| Price | Median 10.5%; middle half 9.75% to 11.5% | A narrow band close to the national 10.25% |
| Structure | Fixed-rate share 9.7%; median term 120 months | Ten-year floating loans, the standard for working capital and goodwill |
| Channel | SBA Express 30.9% | Most loans took full 7(a) underwriting |
| Purpose | Acquisitions 5.7%; start-ups 6.3%; franchises none; SBA 504 none | Operating and acquisition loans; no 504 loans for buildings |
The bottom of the range is the interesting part. The middle half runs from $99,000 to $466,750. Software firms rarely borrow for a vehicle or a machine; they borrow to fund people, to buy out a partner, or to buy another product.
No buildings, no equipment: what the loan rests on
Not one software publisher used SBA 504 in the period, which finances owner-occupied real estate and long-life equipment. That is the collateral picture in a sentence. A software company's balance sheet holds receivables, perhaps some computers, and intangible assets a lender cannot readily sell.
SBA allows a loan that is not fully secured when cash flow supports it, so the absence of hard assets does not end the conversation. The lender will take a lien on what the business has, and will often look to the owners' personal real estate as well. Every owner of 20% or more personally guarantees the loan. The result is that the owners' personal financial position carries more weight in a software file than in, say, a contractor's, and a clean global cash flow matters: SBA requires debt service coverage of at least 1.15x, and 1.0x globally including the owners.
In a software file, the collateral is the customers' willingness to keep paying, and the lender will want to see it in several years of results.
How lenders read software revenue
Not all software revenue is equal in an underwriter's eyes. The question is how much of next year's revenue is already, in practice, committed.
| Revenue type | How it behaves | How a lender reads it |
|---|---|---|
| Subscription (annual or multi-year) | Renews unless the customer cancels; often billed in advance | The strongest kind, if renewal rates are high and documented |
| Subscription (monthly) | Renews unless cancelled, with little notice | Recurring, but can leave quickly; churn history matters |
| Perpetual license plus maintenance | One-time license sale, then an annual maintenance fee | Maintenance is recurring; new license sales are lumpy |
| Implementation and services | Billed as performed on each new customer | Project revenue; it rises and falls with new sales |
| Usage or transaction-based | Varies with customers' activity | Recurring in pattern, variable in amount |
Concentration is the other test. A product with hundreds of small customers survives the loss of any one of them; a product sold to a handful of large enterprises may not. Lenders want revenue by customer and a history of which customers left and why. See customer concentration and debt.
Deferred revenue, capitalized development and the earnings question
Two accounting items change how a software company's statements look to a lender. The first is deferred revenue. A customer who pays for a year up front has given the business cash it has not yet earned, and the balance sheet shows it as a liability. A growing subscription business can therefore show strong cash and modest earnings. A lender reads that as a positive, but it also knows the cash is owed in service, and it will not treat it as spare.
The second is capitalized development. Some companies record part of their developers' salaries as an asset rather than an expense, which lifts reported earnings. Lenders generally treat that spending as a real, recurring cash cost of staying in business, and will adjust earnings back down when they compute coverage. Expect the same scrutiny of other adjustments; see EBITDA add-backs.
SBA lenders measure coverage on historical results. Lending on annualized recurring revenue, or on earnings the company expects once it stops investing in growth, is done by some private credit funds, not by SBA. Transparent's book holds 1,148 lenders that write term and private credit; a company that does not yet show SBA-level coverage would look among them, on different terms. See lending on run-rate EBITDA.
Buying a software company with an SBA loan
Ten loans, 5.7% of the total, financed a change of ownership, at a median of $1,230,000 and a median rate of 9.75%. Almost all of the price in a software acquisition is goodwill, which 7(a) can finance over up to 10 years; see financing goodwill in an acquisition. Because the amount financed, less appraised real estate and equipment, will usually exceed $250,000, SBA requires an independent business valuation, and the purchase loan cannot exceed it; see the SBA valuation requirement.
Software diligence has its own list. The buyer and the lender will want to know that the company owns its code, with signed assignments from every employee and contractor who wrote it; which open-source components it uses and on what terms; whether customer contracts can be assigned or are affected by a change of control; and what hosting and third-party services cost. A buyer without a technical background will be asked who will run the product; see buyer industry experience requirements.
The seller often holds the deepest knowledge of the code. The seller may not stay on as an owner, officer or employee, but may consult for up to 12 months, or up to 24 months under SOP 50 10 8.1 from 1 October 2026. From that date, a change of ownership must also show 1.25x debt service coverage on historical results, financial due diligence is required on every one, and a quality of earnings report on acquisitions of $3 million or more excluding real estate. The standard rules still apply: equity of at least 10% of total project costs, a seller note counting toward up to half of it only on full standby for the life of the loan, and no earnout to the seller.
Start-ups and companies still investing for growth
Start-ups made up 6.3% of software loans. SBA is not venture capital: a start-up needs an equity injection of at least 10% of total project costs, and the lender will want a realistic path to covering payments, usually backed by an owner with a track record and customers already signed. A company deliberately running at a loss to grow is a poor SBA candidate until its results show coverage.
Preparing the file
The SBA list applies: business tax returns for 2–3 years, a P&L and balance sheet with a year-to-date P&L through last month-end, a debt schedule with copies of notes being refinanced, and personal tax returns and a personal financial statement for each owner of 20% or more. For a software publisher, add:
- Monthly recurring revenue by customer for the last two years, with customers gained and lost
- A deferred revenue schedule that ties to the balance sheet
- The policy for capitalizing development costs, and the amounts capitalized each year
- The ten largest customer contracts, with term and assignment clauses
- Evidence that the company owns its code: employee and contractor IP assignments
- Hosting and third-party software costs, since they scale with customers
Transparent builds the lender package — financing model, lender presentation, blind teaser and underwriting memo — in a day once the documents are in, 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.
Common questions
- Can a software company get an SBA loan without collateral?
- Yes. SBA allows a loan that is not fully secured when cash flow supports it. The lender will take what collateral the business has, may look to the owners' personal real estate, and every owner of 20% or more personally guarantees the loan.
- Will an SBA lender lend on my ARR?
- Not directly. SBA lenders underwrite historical cash flow against at least 1.15x debt service coverage. Recurring revenue strengthens the case, but lending on annualized recurring revenue is done by some private credit funds, not SBA lenders.
- Can I buy a SaaS business with an SBA 7(a) loan?
- Yes. Ten software acquisitions were financed in the period, at a median of $1,230,000 and 9.75%. Expect an independent valuation, at least 10% equity, IP ownership checks, and a close look at customer churn and the seller's transition.
- Why did no software publishers use SBA 504?
- Because 504 finances owner-occupied real estate and long-life equipment, and software publishers rarely need either. Their borrowing is for people, working capital and acquisitions, which 7(a) covers.
- How does capitalized development affect my loan?
- Lenders generally treat capitalized developer salaries as a real, recurring cost, so they subtract it when measuring cash flow. Show the amounts clearly so the lender does not have to estimate them.