3 SaaS Debt Financing Advantages for Growth

The New Year is Coming — What’s Your Plan for Growth?

saas debt financingThe past year has been an interesting one for many companies, but for SaaS companies, the experience went one of two ways: a rapid decline in subscribers or staggering growth. Both created new challenges for founders, necessitating shifts in approach ranging from a deeper focus on customer retention for companies losing subscribers to leveraging growth momentum for those experiencing a surge. Regardless of the impact your organization felt, there is now a distinct opportunity to leverage SaaS debt financing for success in the months ahead.

For example, if your subscriber base had to terminate their agreements with you, it’s essential to maintain communication with them so they’re ready to resume their subscription once their businesses stabilize. It’ll also be important to focus on customer retention efforts to remind subscribers of the value you offer and grow those relationships for additional revenue. SaaS debt financing supports these efforts by giving you capital to:

  • Invest in new technology to automate as much as possible
  • Grow customer success teams to increase value for subscribers
  • Expand your sales team to identify new opportunities

If your company experienced rapid growth due to companies needing your platform to sustain operations, SaaS debt financing provides the avenue to leverage that success for even more opportunities. The capital you receive from venture debt funding can be put to work to:

  • Accelerate marketing efforts to promote your success stories
  • Expand your sales team to support increased demand for your platform
  • Hire leaders to champion — and effectively manage — your growth
  • Satisfy any existing equity arrangements (more on this below)

Let’s dig into several SaaS debt financing advantages that you should consider for the road ahead.

SaaS Debt Financing Advantages to Leverage for Success in 2021

1. You Can Do What You Do Best — Faster

One of SaaS debt financing’s most significant benefits is that it allows you to accelerate various processes, functions, and developments within your business — enabling you to increase your monthly and annual recurring revenue faster than organic growth. Nearly every benefit of debt financing leads to some form of acceleration:

  • Investment in marketing means your message and offers spread faster
  • Investment in sales means more prospects converted into subscribers
  • Investment in customer success increases recurring revenue faster

Whatever you decide to do with your growth capital, you’ll be able to put it to work to achieve your company’s specific growth goals with more speed. And along the way, your debt lender will provide advice and guidance based on their history in working within the SaaS industry.

Additionally, the time needed to close a SaaS debt financing deal is much faster than equity investment. Whereas the latter can take several months or longer to find the right investor and prepare the necessary paperwork, debt financing can be concluded in a month or two, possibly even a matter of weeks depending on the time needed to apply and complete due diligence.

2. You Maintain Your Ownership and Say Over Direction

The direction your platform takes is essential to its success. As a SaaS founder, you understand that direction and had a vision for it. That’s why you established your company and platform in the first place. The last thing you need is to put that direction into the hands of a third party. While outside investors will understand your approach and value it due to their decision to invest in you, there will always be the chance that they may disagree with where you want to go.

One of the most critical SaaS debt financing advantages is that you stay in control of your company and its direction. That’s because venture debt is a loan instead of an equity investment, which dilutes your ownership and may require you to give up a board seat to the investor. With SaaS debt financing, you stay in control at all times.

3. SaaS Debt Financing Works How — and When — You Need It to Work

While the terms and details of SaaS debt financing vary by lender, it’s often one of the most flexible growth capital options available to SaaS companies. This is helpful because SaaS companies often lack the assets needed to qualify for other funding options. At River SaaS Capital, our debt financing advantages include:

  • Borrow anywhere from $500k to $5 million based on your growth goals
  • Previous investment and even profitability aren’t required to qualify
  • Repayment terms scale to the financial growth of your company
  • Tranches: borrow a portion of the loan to avoid paying more interest
  • No warrants — learn why we don’t take them here
  • No exit strategy is needed for you to qualify
  • You can re-borrow any principal paid, extending the life of your capital
  • Our debt is complementary to existing investments such as equity
  • We take a partnership approach in all that we do

Ready to Put the Advantages of SaaS Debt Financing to Work?

If you’ve been considering your options for growth acceleration in the new year, our investment team is ready to help. Learn more about our SaaS debt financing solutions, then get in touch with us to discuss your growth goals.