Professional Services
Business Funding for Managed Service Providers (MSPs)
MSPs live and die by monthly recurring revenue. Every new client you onboard requires upfront costs for hardware deployment, software licensing, and engineer time before the monthly payments cover the cost. Scaling an MSP means stacking clients on top of shared infrastructure, but you need to invest in that infrastructure first. The acquisition market for MSPs is hot, and buying a competitor's client base is often cheaper than acquiring clients organically.
Common Uses
What Managed Service Providers (MSPs) Use Funding For
- Deploy endpoint management, backup, and security stacks for new client onboarding
- Acquire a smaller MSP's client contracts and integrate them into your platform
- Hire NOC technicians and Level 2/3 engineers to support a growing client base
- Invest in cybersecurity tools including SIEM, EDR, and vulnerability scanning platforms
Funding Options
Best Funding Types for Managed Service Providers (MSPs)
MRR-Based Financing
Borrow against your monthly recurring revenue from managed service contracts. Specialty lenders in the MSP space underwrite based on MRR, client retention rates, and contract terms rather than traditional financial statements.
SBA 7(a) Loan
Fund the acquisition of another MSP. SBA loans cover the purchase price including client contracts and goodwill. The recurring nature of MSP revenue makes these acquisitions attractive to SBA lenders.
Business Line of Credit
Maintain a revolving line for new client deployment costs. Each new client requires hardware, licensing, and engineer hours upfront, and a credit line prevents these onboarding costs from depleting your operating cash.
What Lenders Look For
Qualification Notes for Managed Service Providers (MSPs)
Related Industries
Related Professional Services Funding
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