Why buying SaaS with SBA so hard?

May 22, 2024

by a searcher from Massachusetts Institute of Technology - MIT Sloan School of Management in Boston, MA, USA

I'm looking to acquire a SaaS business given my experience in the industry but, from what I've heard, SBA lenders often have a hard time approving these loans. Can you help me understand why?

(And if my assumption is wrong and you've had success, would love to hear it!)

Is it that SaaS companies are asset light? That would make sense, but couldn't that be said of many smaller consulting firms, ad agencies, accounting firms, etc.?

Reply by a professional
from University of Pennsylvania in San Francisco, CA, USA

^redacted‌ my experience as a sell-side M&A advisor on SaaS deals is that it's hard for SBA financing to support typical SaaS earnings multiples. That said, we just closed an SBA-financed SaaS deal, so it's doable, particularly with a larger equity injection.

Once you get close to a deal, reach out to ^redacted‌ for help with lenders. If it's SBA financeable, he'll find a lender for you.

Reply by a lender
from Eastern Illinois University in 900 E Diehl Rd, Naperville, IL 60563, USA

^redacted‌ thank you for the tag. There are a lot of lenders that do not like SaaS because they either do not understand it or they are worried how long the software will stay viable. However, we have not had an issue getting SaaS deals financed so long as we can show the viability of the software going forward. I would be more than happy to have a discussion and see if we can provide any assistance. You can reach me here or directly at redacted Good luck.

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