Finance Software Projects – Start Without Upfront Investment

What is the difference between software leasing and hire purchase?

With leasing, you use the software in exchange for monthly payments and decide at the end of the term whether to buy, extend or return – the software remains balance sheet neutral. With hire purchase, you also pay in installments but automatically become the owner at the end of the term – the software is capitalized and depreciated.

Can custom software actually be financed?

Yes, it is possible. Unlike off-the-shelf software, financing custom development requires a specialized partner. We work with leasing companies that finance software projects – even when there is no physical product as collateral.

From what project volume does financing make sense?

As a rule, financing is worthwhile for project volumes of €10,000–15,000 and above. For smaller projects, financing costs often exceed the benefit. However, government funding can also be attractive for smaller projects.

Tip: Use our interactive cost calculators for an initial estimate of your project budget.

Can I combine different financing models?

Yes, this is often advisable. Example: 30% government funding as a grant + 70% leasing for the remaining amount. This significantly reduces your monthly burden. We will identify the optimal combination for you.

What requirements must my company meet for leasing?

Leasing companies assess your creditworthiness based on annual financial statements (usually 2–3 years), management accounts, self-disclosure and possibly a credit agency report. Younger companies can often provide additional collateral or a higher down payment.

We are a startup – can we still get financing?

Yes, with some limitations. For leasing/hire purchase, you typically need at least 1–2 fiscal years. Funding programs like EXIST or innovation grants are specifically designed for startups. We will find the right option for your situation.

Is a down payment required?

For standard leasing, often not. For hire purchase, a down payment of 10–20% is typical to reduce the financing amount. With limited creditworthiness, a higher down payment can facilitate approval.

What tax advantages does software leasing offer?

Leasing payments are fully deductible as business expenses and immediately reduce taxable income. Since the software does not appear on your balance sheet, you also improve your equity ratio – important for credit lines and ratings.

How is hire purchase treated for tax purposes?

With hire purchase, you capitalize the software on your balance sheet and depreciate it (usually 3–5 years). The interest components of the payments are deductible as business expenses. The result is similar to a purchase on credit.

Are government grants taxable?

Grants are generally tax-free and reduce acquisition costs (reduction of the depreciation base). Low-interest loans only affect taxes through interest savings. Detailed advice from your tax advisor is recommended.

What does a typical software financing process look like?

1) Project scoping and proposal creation, 2) Financing inquiry with suitable partners, 3) Credit assessment and approval (approx. 3–7 business days), 4) Contract signing, 5) Project start. For government funding, the application must be submitted before project start.

How long does it take to process a leasing application?

With complete documentation and good creditworthiness, you receive approval within 3–5 business days. More complex cases or larger amounts may take 1–2 weeks. We prepare the documentation to ensure a swift review process.

What documents do I need for financing?

Typically: Annual financial statements for the last 2–3 years, current management accounts, self-disclosure, commercial register extract, managing director's ID. For government funding additionally: project description, de minimis declaration, business plan if applicable.

What lease terms are typical for software leasing?

Standard terms are 36–60 months. Shorter terms (24 months) are possible but increase the monthly payment. Longer terms (72 months) lower the payment but may increase total costs. We typically recommend 36–48 months.

What interest rates should I expect?

Effective interest rates range between 4–8% p.a. for leasing/hire purchase depending on creditworthiness and term. Subsidized loans (e.g., KfW) often offer more favorable rates starting at 1–3% p.a. We obtain multiple quotes and compare them for you.

What happens at the end of the lease term?

You have three options: 1) Purchase at residual value (typically 1–10% of the original price), 2) Extension at reduced payments, 3) Return (for software, effectively end of use). Most customers opt for the purchase.