Royal Bank of Canada (RBC), in cooperation with Export Development Canada (EDC), increased Ackroo’s current revolving line of credit from $350,000 to a maximum of $1.6 million. The increase in the line of credit from RBC is based on a multiple of 4 x MRR (reported monthly recurring revenue) and bears interest at a rate of 4.45%. No additional costs were incurred by the company in expanding the facility.
In addition, BDC Capital provided an additional $1 million of working capital to Ackroo, which is a loyalty marketing, gift card and payments technology and services provider. Under the terms of the loan from BDC Capital, Ackroo received a second and final tranche of $1 million from its previously approved $4 million loan. Of that loan, $3 million was drawn down in July 2019 to support an acquisition and working capital needs. This final $1 million was drawn to support recent small acquisitions and provide working capital to support Ackroo’s on-going growth.
The loan, and additional advance from BDC Capital:
- Bears a 9.75% interest rate while EBITDA is under $750,000 per year and will reduce to a low of 7.5% once audited EBITDA is in excess of $1.1 million per year.
- Requires no principal payments to be made until April 2021 and will be done in the form of an annual excess cash flow sweep.
- Includes a 2.55% annual royalty on clients acquired with the facility during the term of the loan, excluding the first year.
- Includes a 0.5% bonus on sale or change of control payment to be made to BDC Capital should Ackroo sell the business during the term of the loan.
- Includes a 1.5% processing fee of the value of the facility (as the funds are tranched) plus $100 a month financing management fee.
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“We feel very fortunate to have such a strong working partnership with BDC, RBC and EDC,” Steve Levely, CEO of Ackroo, said. “The world is facing challenging times with the global pandemic so seeing organizations like BDC, RBC and EDC continue to support organizations like Ackroo during these times speaks to the strength of our partnership and our economy in general. As a growing company, we fully expect to continue to advance our technology and our company during these challenging times so that we are even stronger when business goes back to normal. These funds help further support our expansion plans in Canada and the USA and allows us to stay committed to our goal of not doing any staff layoffs during the current pandemic while also supporting our current and prospective merchants where we can.”
BDC Capital is the investment arm of the Business Development Bank of Canada.
