A 14 September BIS Quarterly Review article examines US direct lending over 2010–2025. Its authors link expansion to technology firms’ financing demand and lending models based on cash flows and intangible assets. The findings concern the studied market; they do not establish that technology lending is inherently low risk.
Event / source publication date: 14 September 2026The following is Human Fintech’s analysis
Reconcile the revenue definitions first.
An underwriting discussion should establish what management includes in recurring revenue before debating the valuation multiple. Contracted amounts, invoices and collected cash have different implications for debt service. Renewal options, cancellation terms and payment schedules determine how reliably one becomes the next. The lender needs a bridge between them that can be reproduced from underlying records.
Then identify the operating expenditure required to preserve those receipts. Hosting, customer support, product maintenance and essential licences may remain necessary even if new sales stop. A company can report attractive growth while generating little cash after these commitments. Debt capacity should therefore be tested against a period-by-period cash schedule rather than inferred from a single annual revenue metric.
Make concentration an operating scenario.
Imagine a borrower whose largest customer declines to renew. A useful downside case asks what happens next: replacement sales costs, pricing concessions, delayed collections and the time needed to resize the business. This is an illustrative stress design, not an industry forecast. It reveals dependencies that a uniform haircut to revenue can conceal from a credit committee.
The same discipline applies to intellectual property. Legal ownership, continuity of development and the ability to maintain service affect the practical value of an asset. Specialist diligence should establish those conditions. The lending team then needs to translate the findings into a facility structure and monitoring plan, rather than simply citing the presence of software as evidence of collateral quality.
Design monitoring around the next renewal cycle.
A focused reporting package might track cash receipts from existing customers, upcoming contract renewals and unavoidable expenditure. For each measure, agree the data source, delivery date and response to a material deviation. That turns reporting into an operating conversation while there is still time to act, instead of a retrospective explanation delivered after a missed payment.
Investors assessing a lender should ask whether it can maintain this level of borrower understanding as the portfolio grows. Bespoke underwriting creates value only if servicing capacity and information access keep pace. The relevant business question is whether the lender has a repeatable way to assess cash generation and respond to deterioration, not whether software is an attractive sector in aggregate.
White Fintech.
Parts II–III of White Fintech cover lending economics, funding and risk management: a foundation for further reading about the lending business.
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