Product Selection
What is the best business loan for technology purchases?
Equipment financing covers hardware, machinery, and some on-premise software — best for discrete tangible assets. A term loan fits mixed technology investments (hardware, SaaS, implementation, and training, like ERP or POS overhauls) that don't fit a single-asset structure. SBA 7(a) provides long amortization for large, revenue-generating systems. Section 179 may let you deduct qualifying equipment costs the same tax year.
The full picture
What our platform data shows about funding software and tech businesses
Technology companies are a distinct underwriting case, and our own numbers show it. Of the 20 software-as-a-service applications that reached underwriting on ClearValue's legacy platform, 70% qualified for at least one funding option - below the 82.6% rate across all 1,465 completed applications we evaluated. The gap is structural: asset-light software firms give a lender recurring revenue and churn to judge, not equipment or inventory to secure against. (Figures are PII-safe aggregates from applicants actively seeking alternative financing on ClearValue's legacy platform (Feb 2025-Jul 2026) - directional, not a representative survey of all U.S. small businesses.)
Our data shows what actually cleared those files. Across the 433 declines we recorded, the top reason was insufficient revenue (126), well ahead of a general underwriter decline (69) - so a tech business with provable monthly recurring revenue and clean bank deposits underwrites far better than one pitching projected ARR. Working capital was the single most-requested use of funds on our platform (913 requests), which fits software's payroll-and-marketing burn. For the cheapest capital, an SBA 7(a) loan rewards exactly that documented-revenue profile.
Equipment Financing for Hardware and Tangible Technology
Equipment financing works best when the technology purchase is a discrete, tangible asset — servers, manufacturing automation systems, medical devices, on-premise hardware installations. The equipment secures the loan, which supports high advance rates and terms matched to the asset's useful life. The limitation: equipment financing is harder to structure around pure software or SaaS contracts because there's no physical collateral to repossess and resell.
Term Loans for Mixed or Software-Heavy Technology Investments
A term loan is the better fit when the technology investment is a mix of hardware, software licenses, implementation, and training — a single asset-secured facility can't cleanly span all those costs. A fixed lump-sum term loan lets you deploy capital across the full project, with a repayment period matched to the productivity horizon of the investment. Cloud migration, ERP implementations, and point-of-sale system overhauls are common examples.
Section 179 and Bonus Depreciation: Technology Tax Context
The IRS Section 179 deduction allows businesses to deduct the full cost of qualifying equipment and off-the-shelf software placed in service during the tax year, up to an annual limit. Bonus depreciation may also apply. These deductions change the after-tax cost of buying technology outright — a relevant factor when deciding between financing and expensing. Consult a tax advisor for specifics, but confirm before finalizing the financing structure.
- Equipment financing: best for discrete hardware and tangible technology systems; self-collateralizing
- Term loan: better for mixed technology investments (hardware + software + implementation)
- SBA 7(a): long amortization for large technology systems that generate revenue over many years
- Section 179: first-year deduction on qualifying equipment and off-the-shelf software (IRS annual limit applies)
- Software-only or SaaS costs: typically not equipment-financeable; use term loan or working capital line
Example: Manufacturer Upgrading to an Automated Production System
A light manufacturer is investing $280,000 in a new automated assembly system including hardware, installation, and the controlling software. Equipment financing matched through ClearValue Lending uses the hardware as collateral and structures a 5-year term to match the system's productive life. The owner applies once at ClearValue Lending and is routed to the funding partners best matched to it. Estimate your monthly payment first with our business loan calculator.
Sources
- The IRS Section 179 deduction allows businesses to deduct the full purchase price of qualifying equipment and off-the-shelf computer software placed in service during the tax year, subject to annual dollar and income limits. — IRS — Publication 946 (Section 179)
- SBA 7(a) loans can be used to finance equipment purchases, technology systems, and working capital needs, with loan terms up to 10 years for equipment. — SBA — 7(a) Loans
- The Federal Reserve's Small Business Credit Survey finds that access to financing for capital expenditures — including technology investments — is among the most frequently cited financing needs of small and medium-sized businesses. — Federal Reserve — Small Business Credit Survey
Key takeaways
- Equipment financing is the best fit for discrete, tangible hardware — the asset secures the loan.
- Use a term loan for mixed technology projects where hardware, software, and implementation costs span multiple line items.
- Section 179 can let you deduct qualifying technology costs in the year placed in service — check with a tax advisor.
- SaaS and cloud subscription costs typically require a term loan or working-capital line, not equipment financing.
- ClearValue Lending routes technology borrowers to the funding partners best matched to their file — one application, routed to the right partners.
Frequently asked questions
Can I get equipment financing for software-only or SaaS costs?
Generally no — equipment financing is self-collateralizing, secured by a tangible asset a lender can repossess and resell, so pure software subscriptions or SaaS contracts typically don't qualify. Use a term loan or a working-capital line for software-only technology investments instead.
Can I deduct the full cost of business technology purchases in year one?
The IRS Section 179 deduction allows businesses to deduct the full purchase price of qualifying equipment and off-the-shelf computer software placed in service during the tax year, subject to annual dollar and income limits (IRS Publication 946). Confirm the deduction fits your financing structure with a tax advisor before finalizing.
What loan terms are available for SBA-financed technology purchases?
SBA 7(a) loans can finance equipment purchases, technology systems, and working capital needs, with loan terms up to 10 years for equipment — useful for large, revenue-generating technology systems that need a longer amortization than a standard equipment loan.
Equipment financing or a term loan — which fits a technology upgrade?
Equipment financing fits discrete, tangible hardware — servers, on-premise installations, manufacturing automation — where the asset itself secures the loan. A term loan fits mixed technology investments spanning hardware, software licenses, implementation, and training, where no single asset-secured facility can cleanly cover every line item.
How common is technology financing among small businesses?
The Federal Reserve's Small Business Credit Survey finds that access to financing for capital expenditures — including technology investments — is among the most frequently cited financing needs of small and medium-sized businesses.
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Learn more →SBA Loans
The longest terms and lowest rates a small business can access — when you can wait for them.
Learn more →Published 2026-05-22 · Updated 2026-08-17 · https://clearvaluelending.com/answers/business-loan-for-technology