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Software Finance for Businesses in the UK

Written by: Al Shea

Article Overview: With funders looking at emerging markets and new financial products a new type of finance has been become available for the funding of software licenses. This article explains how funders offer finance on software to UK businesses.

Software Finance for Businesses in the UK

Traditional asset finance involves leasing a tangible asset that has some kind of value, ie a big industrial machine, something physical that has a purpose within the business. Funders have always be wary about financing intangibles, such as services, software, etc. until recently.

In the past few years a selection of funders have taken the brave move to begin offering finance on software licenses. This type of finance is still quite new and only available from a select number of specialist funders, however those that are offering this type of finance have seen a huge surge in demand over the past 24 months as businesses look to realise their ROI quicker from buying software licenses on finance.

Typically the software must still be universally supportable, ie a microsoft license, sage, cisco, etc - something that other suppliers of software can fix if anything breaks and the original supplier shuts down. If it is unique software, such as something the supplier has developed themselves, it may prove much harder to find a funder who will offer them a vendor finance scheme as it is perceived as too risky in case the supplier goes out of business and the software stops working.

The introduction of software finance shows the new ground funders are keen to explore in the current day, looking at new ways of lending more of their book whilst keeping bad debt levels down. As such, funders are still being very cautious when underwriting software deals - they will look closely at the clients balance sheet to make sure they are very good credit, and also examine the supplier of the software to make sure they are also a credible organisationand not likely to close down in the future.

If you are a software supplier looking to offer finance to your customers, look for a specialist finance broker in the UK who has access to funding lines prepared to offer underwriting services on software and intangible products.

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Article Tags: emerging markets, funders, software finance, software licenses, uk businesses



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