Business loans for software

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Page written by Chris Godfrey. Last reviewed on June 24, 2025. Next review due April 6, 2026.

Almost every business in the UK is dependent on technology for their success. Digital tools drive innovation, efficiency and competitiveness. However, designing, integrating and maintaining advanced technologies is not cheap – they often have a price tag that puts them out of reach for many UK SMEs.

Business loans for software are here to solve this situation. Instead of using working capital, financing can help you get the essential tech you need and spread the cost over time.

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Why finance software for your business?

Financing business software lets companies acquire the critical technologies they need without a large upfront expense. Valuable working capital can be preserved for other important investments.

Spreading costs over time through subscriptions, leasing, grants, loans or vendor financing, can help businesses improve their cash flow while taking advantage of advanced solutions to enhance their efficiency, productivity, and competitiveness. Financing can also give businesses the flexibility to scale software as their needs evolve and provide access to the latest upgrades and features.

What types of software can be financed?

If it’s for business, you can finance almost any type of software. Common examples include:

CRM and ERP systems

CRM (Customer Relationship Management) systems are designed to help businesses manage customer interactions, improve sales, and improve their service. ERP (Enterprise Resource Planning) systems integrate core business functions like finance, supply chain, and HR into one platform for better efficiency. Businesses typically finance these types of software through capital expenditure (buying licenses), operating expenditure (subscription-based models), or leasing. Alternatively, companies may seek financing from banks and online lenders, use government grants, or opt for vendor-provided payment plans to reduce their upfront costs.

Accounting and payroll software

Accounting and payroll software automates financial tracking, invoicing, tax compliance, and employee wage management. This type of tech can improve accuracy and reduce your admin burden. Businesses often finance this software through outright purchase, subscription-based models, or software leasing. Funding options can include internal budgets, business loans, vendor financing, or grants aimed at supporting digital transformation and improving operational efficiency for small and medium sized enterprises.

Limited companies with multiple properties

Property portfolio loans can benefit companies with multiple properties by reducing administrative burden, improving cash flow and lowering costs. This type of loan can also enable efficient equity release for reinvestment and support strategic portfolio growth, making them a good fit for companies managing multiple property assets under a single corporate structure.

Marketing and automation tools

Marketing software and automation tools can help businesses plan, execute, and track campaigns, manage customer data, and automate tasks such as email marketing and social media posting. These tools can significantly improve your targeting, efficiency, and your ROI. Businesses typically finance this technology through subscriptions, pay-as-you-go models, or bundled marketing services. If you prefer to buy outright, funding options include working capital, business loans, vendor financing, or small business grants.

Industry-specific software (e.g. recruitment, retail, manufacturing)

Industry-specific software means technology that’s tailored to meet the unique needs of various business sectors, such as recruitment, retail, or manufacturing. This type of technology is designed to streamline operations—for example, applicant tracking in recruitment, inventory management in retail, or production planning in manufacturing – as well as enhancing productivity, accuracy, and strategic decision-making. Popular finance options include direct purchase, cloud-based subscriptions, or leasing models. Alternatives include bank loans, vendor instalment plans, or grants aimed at specific industries or small to medium sized enterprises.

Who can benefit from software financing?

Small, medium, large, and in all business sectors – software financing can benefit every type of organisation. For example:

Startups and SMEs

Software financing can benefit startups and SMEs by reducing upfront costs, preserving cash flow, and enabling access to essential technologies early on. It can also offer flexible payment options, making advanced software more affordable. In short, this type of financing can support faster growth, improve efficiency, and aid your organisation’s competitiveness without overwhelming your financial resources.

Growing businesses scaling tech infrastructure

Software financing can also support growing businesses by enabling them to scale their tech infrastructure without large upfront investments. By spreading costs through subscriptions, leasing, or vendor financing, companies can preserve their working capital for other critical needs. This type of financial flexibility can deliver a win/win situation – allowing businesses to adopt advanced tools quickly, gain access to regular software updates, and scale usage as operations expand without putting strain on cash flow.

Companies transitioning to digital solutions

Companies that are transitioning to digital solutions typically use software financing to ease the financial burden of adopting new technologies. Spreading costs over time allows them to obtain the advanced software they need while preserving cash flow and working capital. It also allows for easier upgrades as technology evolves, supports efficient budgeting, and may provide tax advantages to make digital transformation more affordable and sustainable.

Business finance options for software purchases

There are many ways to finance business software. Popular funding options include:

Unsecured business loans

Unsecured business loans are loans that do not require collateral – such as property, technology, or equipment – to secure the borrowing. Approval is typically based on the business’s creditworthiness, cash flow, and financial history. This type of financing typically offers quick access to funds, less risk to business assets and greater flexibility for short-term financial needs. However, due to their unsecured nature you may be able to borrow less than you would with a standard secured loan and you could pay a higher interest rate. Additionally, be aware that unsecured loans often have strict eligibility criteria – such as length of time in business and credit score – due to the increased risk to lenders.

Business lines of credit

Also known as a revolving credit facility, a business line of credit functions like a high-value credit card. Businesses can withdraw as much as they want when they want from a loan facility up to the agreed limit of their borrowing. Once borrowed funds are paid back, they can usually be borrowed again. Interest rates are typically fixed, and businesses may repay on a set or ad-hoc schedule. Security may be required.

Asset finance for software (software leasing)

Asset finance for software, often referred to as software leasing, is a funding solution that allows businesses to acquire software by spreading the cost over time. Instead of purchasing the software upfront, a business leases it from a finance provider for a fixed period, with regular payments. This type of financing may better preserve your cash flow and give you access to the most up-to-date software. It could also include support and upgrades, and the payments may be tax-deductible. You may also be able to buy the tech and/or equipment at the end of the lease for a nominal sum such as £1, or the market value of the assets.

Software leasing can be ideal for businesses that want flexible access to essential software without large capital expenditures. The asset acts as security for the loan. In most cases, no added security is required.

Revenue-based financing

Revenue-based financing is a funding model where a business receives cash in exchange for a percentage of its future revenue. Instead of fixed monthly repayments, the business repays the loan as a share of its income—usually until a set repayment cap is reached.

Because this type of loan is based on your business income, repayments can fluctuate with revenue. However, no equity dilution or collateral is needed, and you may get faster approval than you would with traditional loans. Revenue-based financing can be an ideal fit for growing businesses with steady sales, especially in retail or eCommerce. Security may be required.

Equipment financing with bundled software

Equipment financing with bundled software is a funding option that allows businesses to purchase or lease physical equipment (such as point-of-sale systems, machinery, or computers) along with the essential software needed to operate it, all under a single financing agreement.

This type of loan can simplify budgeting as there is only one monthly payment to make. It can also reduce your upfront costs and ensure hardware and software compatibility. Upgrades, support, and system maintenance are often included as part of a total package.

Subscription-based software vs. one-time purchase – financing implications

Do you buy your business software over time with a subscription, or are you better off buying it upfront with a one-time purchase? Here’s what you need to know:

Subscription-based software involves ongoing monthly or annual payments, making it more manageable for cash flow and easier to include in operating expenses. Financing typically involves operational expenditure and may not require a large upfront payment. This type of financing is scalable and ideal for businesses wanting flexibility and regular updates
Alternatively, making a one-time purchase requires a larger upfront investment. Businesses may also need asset finance or leasing to spread the cost. This type of financing can be cost-effective long-term but may lack included upgrades or system support

Financing implications:

Subscription: Lower upfront cost, better for short-term budgets, easier to cancel or scale
One-time purchase: Higher initial cost which may need financing, but no recurring fees and ownership is retained

Ultimately, choosing between these financing methods depends on your cash flow strength, budget strategy, and your long-term software needs.

Alternative finance options

If the funding options shown above are not for you, there may be other ways to get the software financing your business needs to thrive.

Technology grants and digital adoption schemes

Technology grants and digital adoption schemes, such as the Digital Transformation Flexible Fund are government or public-sector initiatives designed to help businesses invest in digital tools, technology upgrades, and innovation.

Technology Grants:
These are non-repayable funds provided to support the adoption of new technologies, research, or digital transformation. Businesses can use them to buy software, hardware, training, or for cybersecurity improvements
Digital Adoption Schemes:
These programmes offer financial aid, advice, or resources to help businesses integrate digital solutions—such as e-commerce platforms, CRM systems, or automation tools—into their operations.

Benefits include:

Lower technology investment costs
Improved efficiency and competitiveness
Support for innovation and digital skills development

Other business grants

As well as technology grants, many other business grants are available in the UK. Provided by local and national government and some foundations and charities, grants do not need to be repaid like a loan. However, business owners should be aware that there is often stiff competition for grants, the application process can be slow and difficult, and the pool of available money is usually limited, which can restrict the amount of cash you may receive.

Peer-to-peer lending

Peer-to-peer (P2P) lending is a method of borrowing money directly from individual investors through an online platform, bypassing traditional lenders such as banks. Businesses apply for loans, and lenders may choose to fund them, often in small amounts across multiple loans. Although this lending method can be time-consuming for borrowers, it may offer access to funds when companies are unable to obtain other types of business loan. Security may be required.

Venture debt (for tech startups)

Venture debt is a type of financing specifically designed for venture-backed tech startups that already have equity funding from investors. It provides additional capital without immediate equity dilution, acting as a complement to venture capital.

Key features:

Typically offered by banks or specialty lenders
Repaid over time with interest
May include warrants (lender rights to buy equity)

Benefits:

Extends runway between funding rounds
Preserves ownership
Supports growth (e.g., hiring, product development) without giving up more equity

This type of financing is best suited for startups with strong growth potential and investor backing.

What are the benefits of financing software?

Financing business software can offer significant advantages for companies, but it also comes with some drawbacks. Here’s an overview of the pros and cons:

Pros

Preserves working capitalInstead of making a large upfront payment, businesses can spread the cost of software over time and retain their working capital for other needs
Gain access to latest technologyFinancing allows businesses to acquire and upgrade software more easily, helping them stay current with technological advancements and avoid obsolescence
Improved budgeting and predictabilityFixed payment terms make it easier to forecast and manage expenses, supporting more stable financial planning
Tax and financial benefitsDepending on the finance structure (lease, hire purchase, etc.), payments may be tax-deductible, and businesses may be able to claim interest or depreciation on the software
FlexibilityFinancing agreements are often tailored to meet business needs, with options for different payment schedules and the ability to add or remove features during the term
Ability to capitalise on upfront discountsBusinesses may be able to take advantage of vendor discounts for annual or upfront payments while still spreading costs over time

Cons

Total cost may be higher
Over the life of the agreement, the total paid (including interest and fees) may exceed the upfront purchase price
Long-term commitment
Businesses are locked into payment schedules for the duration of the agreement. This can limit flexibility if financial circumstances change
Potential for overextension
Taking on too much debt can strain cash flow if business performance declines or if additional financing needs arise

How to apply for software financing

Obtaining software funding is similar to applying for other types of business loans. Lenders will review your credit score (typically both personal and business) and ask for key business information.

Depending on the type of funding you are seeking, you may need to provide:

Cash flow forecast
Bank statements – past 12 -24 months
Tax returns – past two years
Balance sheet
List of customers
List of major suppliers

Generally, the longer you’ve been in business and the better your credit score is, the more you’ll be able to borrow and the less interest you’ll pay.

Where to get software financing:

You could search for software financing by approaching banks, building societies and online lenders one by one, a process that may take weeks or even months, or you can use the services of a loan marketplace that will immediately introduce you to a choice of loans from a range of lenders. Some marketplace platforms can also give you advice and help you with the application process. This can be especially useful for businesses who have never applied for software finance before.

Get started with Swoop's business funding platform

Working with business finance experts can make all the difference when applying for a loan. Contact Swoop to discuss your borrowing needs, get help with your application and to compare high-quality software finance from a choice of lenders. Get the technology your business needs to grow. Register with Swoop today.

Written by

Chris Godfrey

Chris is a freelance copywriter and content creator. He has been active in the marketing, advertising, and publishing industries for more than twenty-five years. Writing for Barclays Bank, Metro Bank, Wells Fargo, ABN Amro, Quidco, Legal and General, Inshur Zego, AIG, Met Life, State Farm, Direct Line, insurers and pension funds, his words have appeared online and in print to inform, entertain and explain the complex world of consumer and business finance and insurance.

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