Technology and media business finance for software, IT, telecoms and creative firms

Technology and media business finance is lending assessed mainly on revenue, contracts and cash flow rather than on bricks and mortar. A profitable software or managed services firm with recurring income can often borrow unsecured. An agency with good clients on long payment terms can borrow against its invoices. A production company can finance cameras and edit suites against the kit itself. The common thread is that lenders want to see where the next twelve months of income will come from, and how dependable it is.

Intellectual property, code and brand value matter to the business but are rarely accepted as security on their own by mainstream lenders, so the case has to be made from trading figures.

Debt suits technology and media businesses that are profitable or close to it, have at least a couple of years of accounts and can show income that repeats. It is a harder fit for pre-revenue start-ups, studios funding a single title with no other income, and companies burning cash to grow; for those, equity or grants usually come first, and borrowing follows once revenue is proven.

Unsecured loans and asset finance can reach a decision within a few working days in straightforward cases. Invoice finance usually takes longer because the funder audits the sales ledger before the facility goes live, and acquisitions follow the deal timetable. Timescales depend on the lender, the case and how quickly information is supplied.

Because there is little physical security, most unsecured facilities ask for personal guarantees from the directors, and larger ones may add a debenture over the company. Asset finance is secured on the equipment. Invoice finance takes security over the debtor book. Read any guarantee carefully and check whether it can be capped.

Unsecured loans charge interest plus an arrangement fee. Revenue-based finance usually charges a fixed fee repaid as a share of monthly revenue, so the effective cost depends on how fast you repay. Invoice finance combines a service fee with a discount charge on money drawn. Asset finance is built into fixed rentals. Compare early repayment terms as well as the headline price.

Equity investment, angel funding and innovation grants are common in this sector; we do not arrange them, but they often sit alongside debt. Customer prepayments, annual billing and tighter credit control can all reduce the amount you need to borrow. Our article on technology and media business loans looks at the options in more depth.