Quick answer
IT and tech companies usually borrow to hire developers ahead of revenue, bridge the wait for an R&D tax incentive refund, finance hardware for managed-service clients, and fund growth or acquisitions. With few physical assets, they're assessed mainly on recurring revenue, contracts and cash flow. R&D advance loans, revenue-based finance, equipment finance and unsecured loans are common fits. Banks suit profitable, established firms; specialist lenders back faster-growing ones.
Key points
- Tech businesses have few hard assets, so lenders lean on recurring revenue, contract terms and customer churn
- Companies under $20m aggregated turnover can claim a 43.5% refundable R&D tax offset, and some lenders advance part of it before the refund lands
- The 2026–27 Budget announced R&D tax incentive changes from 1 July 2028, including limiting refundability to a company's first 10 years; they aren't law yet
- Managed service providers can finance hardware they supply to clients, keeping their own cash for wages
A traditional lender likes things it can see: a building, a truck, a forklift. A typical Australian tech company has laptops, a cloud bill, some source code and a team of very well-paid people. The value is real, sometimes very large, but it doesn’t fit neatly on a security schedule.
That doesn’t make tech firms hard to fund. It means the conversation is about different things: revenue that repeats, contracts that run for years, government refunds that arrive on a timetable, and hardware that clients pay for monthly. Lenders who work with the sector have built products around each of those.
What kind of tech business are you, in a lender’s eyes?
“IT” covers businesses with quite different risk profiles, and lenders sort them quickly.
- Managed service providers (MSPs). Monthly support agreements, often with multi-year terms. Predictable, contract-backed income that banks and non-banks both like. Usually the easiest tech businesses to fund.
- Software development and consulting houses. Project-based billing on time and materials or milestones. Assessed much like other professional services, with attention to client concentration and debtor days.
- SaaS companies. Subscription revenue, often loss-making while they grow. Strong recurring revenue can unlock revenue-based finance even without profit.
- Hardware resellers and integrators. Lower margins and stock risk, but also tangible goods. Trade and inventory finance can fit.
- Early-stage product companies. Little or no revenue. Conventional loans rarely fit; R&D refund finance and equity usually do.
Knowing which box you sit in helps you aim at the right lender first.
Can you borrow against an R&D tax refund?
Frequently, and for Australian tech firms this may be the single handiest facility on the menu. Under the R&D Tax Incentive, companies with aggregated turnover below $20 million can claim a refundable tax offset of 43.5% of eligible R&D spending (the 25% base company tax rate plus an 18.5 percentage point premium). Because it’s refundable, a loss-making company can receive it as cash.
The catch is timing. You do the work and pay the developers during the year, register the activities with the program after year end, lodge the company tax return, and only then receive the refund. For a company spending heavily on engineering, that can mean waiting well over a year for money already earned.
Specialist lenders fill the gap with R&D advance loans, which lend a portion of the expected refund, sometimes quarter by quarter as eligible costs build. Repayment comes straight from the refund. Lenders will want your R&D registration history, an adviser’s estimate and evidence of the spending.
A change to watch. In the 2026–27 Budget the Government announced R&D tax incentive reforms to start on 1 July 2028. As announced, refundability would be limited to a company’s first 10 years, the turnover threshold for the refundable offset would rise from $20 million to $50 million, the minimum annual spend would rise from $20,000 to $50,000, and supporting R&D activities would no longer qualify. The ATO notes the measure isn’t yet law. If your company is more than a decade old and relies on refunds, it’s worth planning now for a funding mix that doesn’t depend on them. See our page on funding research and development.
How do lenders read recurring revenue?
For SaaS and MSP businesses, recurring revenue is the closest thing to collateral. Lenders and revenue-based finance providers look at:
| Metric | Why the credit team cares |
|---|---|
| Monthly or annual recurring revenue | The base the facility is sized against |
| Customer churn | How quickly that base erodes if new sales stopped |
| Gross margin | How much of each dollar is left after hosting, support and licences |
| Contract length and notice periods | How locked-in the revenue really is |
| Top-ten customer share | Concentration risk |
| Cash runway | Whether the business can keep going if growth slows |
A business with modest revenue but very low churn can sometimes borrow more than a larger one whose customers come and go. Run your numbers through our cash runway calculator before you talk to a lender, since runway is often the first question.
Want to know how your recurring revenue might translate into a facility? Ask us for a read. Roughly sixty seconds, and asking never lands on your credit file.
How can MSPs fund hardware for clients?
Many managed service providers bundle laptops, firewalls, servers and phones into a monthly per-seat price. That means the MSP pays the supplier up front and recovers the cost over two or three years. Grow quickly and the hardware bill quickly outruns cash.
Equipment finance and rental arrangements solve this: the financier pays for the hardware and the MSP repays monthly, roughly in step with what the client pays. Some financiers will contract directly with the end client instead. Either way, the MSP’s cash stays available for its biggest cost, which is people. For your own office kit and infrastructure, see funding technology upgrades.
What worries lenders about tech companies?
- Key people. If two founders hold all the knowledge and relationships, lenders worry about what happens if one leaves.
- Customer concentration. A development house that earns half its revenue from one enterprise client is exposed to that client’s budget cycle.
- Payroll-heavy cost base. Wages are hard to cut fast, so a sudden revenue dip can turn into a cash crisis.
- Capitalised development. Lenders may strip capitalised software costs out of the balance sheet when assessing you.
- Super and PAYG arrears. Fast-growing tech firms sometimes fall behind. Have an ATO payment plan in place before applying if you’re behind.
What should a tech company send a lender?
Recent business bank statements; management accounts and, for larger amounts, the last two years of financial statements; a recurring revenue or debtor report from your billing system; a customer list with contract terms; and, for R&D advances, your registration details and adviser estimate. For MSP hardware deals, add the client agreements and supplier quotes.
Example: a SaaS company waiting on its refund
A hypothetical case. A Melbourne SaaS company with about $3.2m in annual recurring revenue spent heavily on a new product module last financial year, with most of its engineering payroll eligible for the R&D tax incentive. Its adviser estimates a refund in the high six figures, but it won’t arrive for months, and the founders want to keep hiring.
Rather than raise equity at a valuation they don’t like, the founders take an R&D advance loan for a share of the estimated refund, plus a smaller revenue-based facility repaid as a percentage of monthly receipts. When the ATO pays the refund, the advance is cleared in one hit. The founders keep their ownership, and the new module ships on time. Our comparison of debt vs equity funding walks through the trade-offs.
Where to from here for your tech business?
Tech companies with steady recurring revenue or clean accounts should talk to their bank first, as it may well be the cheapest money on offer. If you’re growing faster than the bank’s credit policy can keep up with, or your best asset is an R&D refund still months away, there are lenders built for that.
Submitting your details takes a minute or so, and the enquiry itself leaves your credit score exactly where it was. We never fire your information off to a long list of financiers, which keeps your inbox and phone free of strangers. A specialist reads through your revenue model, contracts and plans and then gets in touch by phone. Please enter realistic numbers for revenue and the amount you want, so we can identify the right structure the first time.
Frequently asked questions
Can a tech startup get a business loan without revenue?
It's hard to get a conventional loan with no revenue. Pre-revenue companies more often rely on equity, grants or, if they do eligible R&D, finance secured against an expected R&D tax refund. Once regular revenue shows in bank statements, unsecured loans and revenue-based finance become realistic.
What is an R&D tax incentive advance?
It's a loan secured against the refundable R&D tax offset you expect to receive. A lender assesses your eligible spending, usually with your R&D adviser's help, and advances a share of the estimated refund. When the ATO pays the refund, the loan is repaid from it.
How do lenders treat SaaS recurring revenue?
Favourably, if it's genuinely recurring. They look at monthly or annual recurring revenue, how much customers churn, gross margin and how long customers stay. Revenue-based finance providers in particular size their offers on these metrics rather than on profit.
Do banks lend to IT businesses?
Yes. A profitable IT services company or MSP with a few years of accounts and solid contracts is a good candidate for a bank overdraft, equipment finance or acquisition loan, often at the lowest cost available. Banks are more hesitant with loss-making, fast-growing software companies, which is where specialist lenders come in.
Is debt or equity better for a tech company?
It depends on the stage. Debt keeps ownership intact but needs cash flow to repay. Equity suits riskier, pre-profit growth. Many tech firms use both: equity for product development and debt for predictable needs like hardware, R&D refund timing or working capital.