Small Business Loans for IT and Technology Companies

In a late 2019 report, the U.S. informational technology (IT) industry was valued at $1.7 trillion, just under one-third of the global industry’s value. This report also predicted an industry growth rate of between 1.9% and 5.4%.

To reach the high end of this range, the industry would have to reach new customers, whether clients in familiar industries with standard IT needs or clients in industries that need brand new IT solutions. A growth rate in the low end of this range would reflect customer spending hesitance and natural disasters – factors related to the entire economy, not just the IT industry. Since the COVID-19 pandemic has slowed economic expansion, the industry growth rate is expected to fall in the lower part of the projected range.

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Even though the IT industry’s growth is smaller than projected, it’s still positive. That may be due to the increased demand in remote working and strong, secure IT networks now that more people than ever are working from home. Thus, it may be a good time to prepare for an even brighter future to come by expanding services or hiring more staff. Low-cost funding and small business loans for IT and technology companies can help you do just that.

Financing Options for Established IT and Technology Companies During the COVID-19 Coronavirus Pandemic

In March 2020, Congress and the White House passed the CARES Act in response to the nationwide COVID-19 shutdown. This bill included a new Small Business Administration (SBA) 7(a) loan program called the Paycheck Protection Program (PPP). Through this program, small businesses could apply for funding to stay afloat during the ongoing economic crisis.

Visit the SmartBiz Small Business Blog for updates on new loan opportunities and forgiveness information. You can also learn how IT and technology companies can use PPP loans via the SmartBiz Loans COVID-19 information center: Small Business Loans & Resources in Times of Coronavirus (COVID-19).

Opportunities to increase small business cash access for IT and technology companies

The role of IT firms fits the shift to remote work to a T. IT specialists build and maintain internet and intranet networks and mechanisms for companies to use, and these systems are traditionally built to be accessible solely at company offices. With the shift to remote work comes a need for establishing similar, secure systems for remote teams, thus making the IT industry the rare sector with demand that the COVID-19 pandemic has not devastated. As such, the IT industry now has new opportunities to generate more income and therefore may demand a greater need for funding to help fuel expansion, take on more clients, offer enhanced services, expand customer support, and many other demands that increased with the meteoric rise of remote work.

Financial options for IT and technology companies

Through the below programs and loans, you can find affordable small business loans for IT and technology companies. You can choose from several types of SBA loans or pursue non-government funding. No two funding types have exactly the same loan approval periods and rates.

The SBA 7(a) loan program

If your IT or tech company qualifies for a low-cost SBA 7(a) loan, this funding option might be your best bet. That’s because SBA 7(a) loans have low monthly payments and rates, plus their long terms mean you don’t have to rush to repay your loans. They’re an easy way to stabilize, grow, or expand your business. You can achieve these goals by using your SBA 7(a) loan toward:

Working Capital – Working capital is the difference between your current assets and your current liabilities. It’s also the amount of cash you have on hand for business use. You should never have negative working capital, and by using your SBA 7(a) loan to hire new employees or buy new equipment, you can build toward positive working capital.

Debt Consolidation Loans – Through debt consolidation loans, you can refinance any current company loans such as merchant cash advances, short-term business loans, daily or weekly payment loans, or high-interest business loans.

Commercial Real Estate – You can purchase owner-occupied commercial real estate through your SBA 7(a) loan. If new purchases aren’t on your horizon, you can also refinance your current commercial real estate mortgages.

Advantages of SBA 7(a) loans for IT and technology companies

Lending experts often consider SBA 7(a) loans the “gold standard” due to their 10-year terms (25 years for commercial real estate) and low rates. Other reasons that SBA 7(a) loans are so highly regarded include their:

  • Wide use of funds
  • Affordable monthly payments
  • Availability in all 50 states
  • Lack of prepayment penalties

Requirements for IT and technology companies to apply for SBA 7(a) loans

To apply for SBA 7(a) loans, you and your company must meet the below requirements. Some lenders will have additional requirements that others don’t, such as presenting a business plan (which SmartBiz Loans does not mandate).

  • Your company must be based in the U.S.
  • Your company must be at least two years old
  • You and your company must be on-schedule with all government-related loan repayments
  • Your agency must have no outstanding charge-offs, recent settlements, or tax liens
  • You must be at least 21 years old
  • Your personal credit score must be above 650
  • You must be a U.S. citizen or lawful permanent resident
  • You must have no foreclosures or bankruptcies in the previous three years

How to apply for an SBA 7(a) loan for your IT or tech company

Step 1: First, make sure you meet the above SBA 7(a) loan requirements. Learn more via the SmartBiz Loans page about SBA Loan Requirements for Existing Business.

To discover how your business financials stack up for funding, use our easy-to-use online tool. SmartBiz Advisor™ helps you track the financial health of your business and learn how banks typically evaluate your business.* SmartBiz Advisor also recommends ways to help you improve your credit and strengthen the financial health of your business as needed. Read feedback from real SmartBiz Advisor users and sign up here.*

Step 2: Step 2: Collect all your paperwork – there might be a lot. Your accountant, bookkeeper, or another financial expert can help you with this step.

Step 3:  Choose your lender based on their:


Read your lender’s Consumer Affairs, Google, and TrustPilot reviews. Here, you’ll see whether other borrowers have had good experiences with your lender. You might even find other IT and technology company owners among the reviewers.


Your lender should state your APR and annual interest rate clearly from the get-go. These figures are fundamental to a loan’s quality, so if your lender isn’t apt to share this information, pursue a different lender.

Obvious loan terms

Fine print that feels impossible to understand is a bad sign, as complex fine print can hide unfavorable loan costs and payment schedules. A loan that holds water will clearly state a total loan amount, payment frequency and amounts, collateral requirements, and any applicable prepayment penalties.


Other than interest and repayment fees, your loan should include a few charges. Excessive fees are a red flag, as is anything stating that fees are due after loan funding or after your loan’s lifetime.


Even if your loan itself feels trustworthy, you shouldn’t use lenders who don’t make themselves readily available to you. Your lender should pair you with a representative whom you can easily reach via email or phone. Make sure this representative is familiar with your application, company, and industry. If not, consider using other lenders.

The SBA 504 loan program

Through the SBA 504 loan program, your small businesses can obtain low-cost expansion or modernization funding. For example, if your IT or tech company is on the hunt for commercial real estate to open a new location, your SBA 504 loan can go toward that.

Additionally, SBA 504 loans are helpful in cases when your agency meets the public policy goals of your local community development corporation (CDC). In this case, your CDC and 504 loans can together cover as much as 90% (50% from your loan, 40% from your CDC) of your costs for an expansion or modernization project. You will be responsible for any remaining payments, which you will cover via a down payment.

The SBA microloan program

Through the SBA Microloan Program, very small businesses (a.k.a. microbusiness) can obtain loans of up to $50,000. If your company qualifies, you can use your microloan for all purposes except debt payments and commercial real estate purchases.

Non-SBA loans and other funding options

Although SBA loans are often the best possible IT and technology company funding option, you have other options if you don’t qualify. These other funding options may have larger payments, higher rates, and shorter terms. They include:

Bank term loans

If you don’t qualify for SBA loans, try bank term loans for equally quick funding. You can use these loans toward refinancing your debts and obtaining working capital. When choosing a lender for your bank term loan, ask your lender about their possible loan amounts, prepayment penalties, rates, and repayment terms.

Merchant cash advances

If your clients pay you via credit or debit card, you can consider merchant cash advances (MCAs). Through MCAs, your card company will give you advance funding that you’ll repay in one of two ways. You’ll either put aside a portion of all your card transactions to funnel back to your card company, or you’ll repay them in regularly scheduled installments.

MCAs are convenient, but they’re usually expensive, as most MCAs have extremely high APRs. Learn more about MCAs via the SmartBiz Loans blog What You Need to Know About an MCA.

Business lines of credit

Use business lines of credit to get funding that you don’t have to use in its entirety. You’ll have access to a funding maximum proportional to your credit score, and though this amount will be less than what you’d receive from a bank term loan, you don’t have to use all of it. In fact, not using all of your business line of credit may be a smart financial move, as you’ll only pay interest on the money you do use.

Additionally, you can borrow funds from your business line of credit as frequently or infrequently as needed. You’re unlikely to have collateral requirements since business lines of credit are usually unsecured. The SmartBiz Loans blog Small Business Lines of Credit Pros and Cons explains more.

You might think that business lines of credit are like business credit cards, and in some ways, that’s true. Both funding options are revolving lines of credit, but that’s about where the similarity ends. You keep your credit cards if you max them out, but business lines of credit immediately cease when you use all their funds.

Why Choose SmartBiz Loans?

Need funding to rebuild your business? Don’t waste time going from bank-to-bank filling out multiple applications. SmartBiz helps you find the best financing for your unique needs whether that’s an SBA loan, Bank Term loan, or other financing.  About 90% of qualified applications we refer to banks are funded and our financial professionals are on hand to answer your questions. Discover if you’re pre-qualified here without impacting your credit scores** and read the SmartBiz 5-star customer service reviews on TrustPilot.

 *The information provided through SmartBiz Advisor, including the Loan Ready Score, is for educational purposes only. SmartBiz Advisor is not a financial or legal advisor as defined under federal or state law. Use of this information is not a replacement for personal, professional advice or assistance regarding your finances or credit history.

**We conduct a soft credit pull that will not affect your credit score. However, in processing your loan application, the lenders with whom we work will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit pull and happens after your application is in the funding process and matched with a lender who is likely to fund your loan.

 What you need to know: The information provided through SmartBiz® University and the articles contained therein are for educational purposes only. Use of this information is not a replacement for personal, professional advice or assistance regarding your finances or credit history.