SG Credit Partners Provides $3MM ARR Borrowing Base Growth Capital Facility

Feb
28
2020

The Company:  Founder-owned AI software subscription and services company providing a management platform for microservice-based enterprise applications.  Services Revenue: $10MM | SaaS Revenue: $3MM.

The Financing Situation:  The Company had successfully grown their annual recurring revenue (ARR) base from $2MM to $3MM over the course of 12 months with no outside investment. In order to raise an equity round at a high valuation, they knew they needed to drive ARR up to $5MM in 2020. This would require investment in software development and hiring additional sales personnel, but the Company was under a cash constraint due to the cyclical nature of their contracts. The majority of the Company’s contracts are tied to government agencies and therefore tied directly to the annual government budget and spending cycle. The Company needed near term liquidity to fund R&D and sales initiatives in order to achieve their revenue growth goals in 2020.

The Solution: SG was impressed with the Company’s software platform, organic growth, strong pipeline of contracted revenue, and ability to reach positive cash flow with no equity financing and minimal debt financing. SG provided a senior secured, $3MM growth capital loan structured around an ARR borrowing base and provided tailored amortization around the Company’s cyclical cash flow.


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California loans are made pursuant to SG Credit Partners, Inc.'s California Department of Corporations Finance Lender License No. 60DBO-87290. Credit approval is subject to SG Credit Partners, Inc.'s credit standards, and actual terms (including actual loan amount) may vary by applicant. SG Credit Partners, Inc. requires certain supporting documentation with each new application. Complete disclosures of APR, fees, and payment terms are provided with each loan and are available from SG Credit Partners, Inc. at 23 Corporate Plaza, Suite 100, Newport Beach CA 92660, telephone 1-800-348-0232.