SaaS financing is any way a software-as-a-service company raises money without, or before, selling more equity. The main options are revenue-based financing tied to your subscription revenue, lines of credit and term loans from online lenders or banks, SBA-backed loans, financing offered inside your payment processor, and venture debt. Which one fits depends mostly on your recurring revenue, how much runway you have and whether you need cash for a one-time project or for ongoing growth.
This page sits under our IT and technology business loans guide. It explains how each option works, what it costs, what lenders look at in a subscription business and the trade-offs to weigh before you sign.
Why SaaS companies are financed differently
Much small-business lending leans on hard collateral (equipment, vehicles, real estate) and on profits. Many SaaS companies have little of either: their main assets are code, customer contracts and recurring revenue, and they may reinvest everything in growth. That shapes every option below. The more a lender relies on your revenue alone, the more it tends to charge for the risk and the more closely it watches your monthly numbers. The more traditional the lender, the lower the cost can be, but the more you will need profits, time in business and collateral or guarantees.
SaaS financing options compared
| Option | How you repay | What it usually suits | Main trade-off |
|---|---|---|---|
| Revenue-based financing | A share of monthly revenue, or fixed payments sized to revenue, until a set total is repaid | Growth spending with a clear payback (sales hires, marketing) | Total cost is set up front, so paying back fast raises the effective annual cost |
| Payment-processor financing (for example Stripe Capital) | A percentage of card sales processed through the platform, plus minimums on loans | Companies that bill most customers through that processor | You cannot shop the offer; it comes from the platform or not at all |
| Business line of credit | Interest on what you draw, with scheduled payments | Timing gaps, such as annual contracts billed in arrears | Online lines can carry high APRs; limits are often modest |
| SBA 7(a) loan | Monthly payments over a long term | Profitable or near-profitable companies with a few years of history | Paperwork and a longer timeline; ask about personal guarantee requirements |
| SBIC debt or equity | Loan payments, or a share of ownership | Growing companies that need larger amounts | Selective; equity dilutes ownership |
| Venture debt | Loan payments, often after an interest-only period | Venture-backed companies extending runway between rounds | Ask whether warrants (rights to buy shares) or covenants are attached |
Figures on this page were checked on September 21, 2026. Lenders change their terms often, so confirm current figures with each provider.
How revenue-based financing works for SaaS
With revenue-based financing, a provider advances cash against your future recurring revenue. You repay either a fixed share of revenue each month or fixed installments sized to your revenue, until you have paid back the advance plus a fee. Because the fee is usually set as a flat amount rather than as interest, the cost does not shrink if you repay early, and the faster you repay, the higher the equivalent annual rate.
Dedicated SaaS revenue-based lenders set their own minimums for annual recurring revenue (ARR), months of revenue history and growth. Ask any provider for these in writing, along with the total repayment amount, the payment schedule and what happens if revenue drops. See revenue-based financing for SaaS and e-commerce and revenue-based financing vs. a loan.
How the cost is quoted. You will see three cost measures in this market. A flat fee is a fixed dollar amount added to what you borrow. A factor rate (for example, a made-up 1.15) is a multiplier: the amount advanced times the factor rate equals what you repay. An APR (annual percentage rate) expresses the yearly cost including fees, so it is the only one of the three you can compare directly across products with different terms. If an offer quotes a fee or factor rate, ask the provider for the estimated APR at your expected repayment speed.
Financing through your payment processor: Stripe Capital
Many SaaS companies bill subscriptions through Stripe, and Stripe offers financing to some of its US users. Stripe describes the terms on its Stripe Capital documentation:
- Cost. “The total cost of your financing is your loan or advance amount plus a flat fee.” Stripe says the program has no “late fees, early payment fees, or origination fees.”
- Repayment. Payments come from “deducting a percentage of your Stripe sales, known as the repayment rate,” so “you pay more when your business has higher sales and less if business slows down.” Loans also carry a minimum payment, “typically on a 30- or 60-day basis.”
- Minimum requirements. US businesses need at least 3 months of processing on Stripe, “a processing volume of 5,000 USD minimum per year and an average processing volume of USD 1,000 for the last 3 months.” Meeting the minimums does not guarantee an offer.
- Who provides it. Loans “are issued by Celtic Bank or Lead Bank.” Merchant cash advances are provided by YouLend and are described as a purchase of future receivables that “isn’t a loan or a credit transaction.”
- Offers. Stripe sends offers to eligible users, and “You can’t request a particular financing type.”
The main trade-off is that Stripe bases eligibility on “overall processing volume and history on Stripe.” If you invoice larger customers by ACH or wire outside Stripe, that revenue may not help your offer.
Lines of credit and term loans
A line of credit fits a common SaaS cash gap: you pay for hosting, payroll and sales commissions monthly but some customers pay annually or on net-60 terms. See our guides to the business line of credit and line of credit vs. term loans.
As one example of an online lender’s published terms, OnDeck’s business line of credit offers limits “ranging from $6,000 to $200,000” with repayment terms of “12, 18 or 24 months,” and says it does not charge “annual fees, monthly fees or draw fees.” OnDeck states that “The average rate for lines of credit is 59.8% APR,” based on loans originated in the half-year ending June 30, 2026. Its minimum qualifications are a 625 personal FICO score, 1 year in business, $100K in annual revenue and a business checking account. Depending on the state, loans may be issued by an OnDeck company or by Celtic Bank.
The trade-off is cost: compare the APR with what a bank or SBA lender would charge if your company qualifies.
SBA loans for software companies
SBA 7(a) loans can fund a software business that meets SBA eligibility rules. The SBA’s 7(a) page sets a maximum of $5 million and lists uses including “Short- and long-term working capital,” “Refinancing current business debt” and “Purchasing and installation of machinery and equipment, including AI-related expenses.” Borrowers must be for-profit, small under SBA size rules and “creditworthy,” and must show they cannot get credit on reasonable terms from non-federal sources.
The SBA’s 7(a) loan types page matters for asset-light companies:
- 7(a) Small loans go up to $350,000. For loans of $50,000 or less, “SBA does not require collateral, except for International Trade loans.” Above that, lenders follow their own collateral policies, but “a loan is not to be declined solely on the basis of inadequate collateral.”
- SBA Express loans go up to $500,000, and Express revolving lines of credit can run up to 10 years.
The SBA’s terms page sets a maximum maturity of 10 years for working capital. Rates are negotiated with the lender, subject to SBA maximums. The trade-off is time and documentation: expect to provide tax returns and financial statements, and ask the lender about personal guarantee requirements. See our SBA loans page for the full process.
SBICs and venture debt
Small Business Investment Companies (SBICs) are privately owned funds licensed and regulated by the SBA. According to the SBA’s investment capital page, “SBICs invest in small businesses in the form of debt and equity,” and “A typical SBIC loan ranges from $250,000 to $10 million, with an interest rate between 9% and 16%.” Equity investments typically range “from $100,000 to $5 million.” The SBA lists more than 300 licensed SBICs, each with its own focus, so check whether a fund invests in software before you approach it.
Venture debt is term debt offered to companies that have raised venture capital, usually to extend runway between equity rounds. Terms vary widely by lender. When comparing offers, ask about the interest rate, any interest-only period, fees, warrants, financial covenants and whether the lender requires you to keep your deposits with it.
What lenders look at in a SaaS business
Each lender sets its own criteria. Be ready to show:
- Recurring revenue. Monthly recurring revenue (MRR) and ARR by month, ideally from your billing system rather than a spreadsheet.
- Retention and churn. How much revenue you keep from existing customers each year, and how many cancel.
- Gross margin. What hosting, support and third-party software cost per dollar of revenue.
- Cash runway. Months of cash at your current burn rate, before and after the financing.
- Customer concentration. Whether one or two customers account for a large share of revenue.
- Financial statements and tax returns. Banks and SBA lenders will also check business and personal credit and time in business.
Pitfalls to weigh
- Comparing fees with APRs. A flat fee on a short repayment can cost more per year than a higher-looking interest rate on a longer loan. Put every offer on an APR basis at your expected repayment speed.
- Borrowing against revenue you might lose. If churn rises, a fixed minimum payment still comes due. Model a downside case before you sign.
- Stacking. A second advance before the first is repaid can take a large share of monthly revenue. Check whether existing agreements restrict new debt.
- Liens and covenants. Some lenders file a UCC-1 lien on business assets; Stripe, for example, says a UCC-1 financing statement “might be filed” in connection with its loans. Liens and covenants can affect later bank loans or an acquisition, so read them before closing.
FAQ
Can a SaaS company that is not yet profitable get financing?
Yes, some providers lend against recurring revenue rather than profits, and processor financing is based on sales history. Banks and SBA lenders look for the ability to repay, so an unprofitable company will usually find fewer options there.
Is revenue-based financing a loan?
It depends on the contract. Some products are structured as loans, others as purchases of future revenue. Stripe, for example, offers both, and says its merchant cash advance “isn’t a loan or a credit transaction.” Read which one you are signing.
Do I have to give up equity?
Revenue-based financing, lines of credit, term loans and SBA loans do not take ownership. SBIC equity investments do, and some venture debt includes warrants that can convert into a small ownership stake.
How much can a SaaS company borrow?
Published ranges vary by product. OnDeck’s line of credit runs from $6,000 to $200,000; SBA 7(a) loans go up to $5 million; SBIC loans typically range from $250,000 to $10 million. Revenue-based lenders set their own limits, so ask each one how it sizes an offer.
Next step
Before you compare offers, write down how much you need, what it will fund and how many months it should take to pay back. Our IT and technology business loans page explains how we compare lines of credit, term loans and SBA options from the lenders we work with, and our IT equipment financing guide covers servers, laptops and other hardware.
Sources
- Stripe: How Stripe Capital works
- OnDeck: Business line of credit
- OnDeck: Loan qualifications
- U.S. Small Business Administration: 7(a) loans
- U.S. Small Business Administration: Types of 7(a) loans
- U.S. Small Business Administration: 7(a) terms, conditions and eligibility
- U.S. Small Business Administration: Investment capital
About this page. Written by Ezra Cabrera, Content Team Lead at SMB Compass. Figures were checked against the primary sources listed above on September 21, 2026; lenders change their terms, so confirm current terms before you apply, and let us know if you spot a figure that has changed. SMB Compass is a business financing broker: we don’t lend our own money, and we are paid by the lenders we place loans with. This page is general information, not financial, legal or tax advice.