Imagine a hypothetical B2B startup operating in the medtech sector, which has developed and owns its full stack of hardware and software products, with early support from angel investors.
The business is growing fast, and has secured $10 million in VC funding to fuel its expansion into new markets, as well as new research and development of new product lines.
At the same time, its current products are selling well, and orders are coming in the door every day, but payment is on delivery.
Through a Tractor non-dilutive loan, the business is able to borrow $1 million, allocated almost entirely to manufacturing.
This means the team can continue taking orders without seeing a dip in cash flow – and without taking their foot off the pedal.
Loan: $1 million
Annual percentage rate: 20%
Loan term: 12 months
Total interest: $111,614
Monthly repayments: $92,634
Total repayment: $1.11 million
Startup: Swoop Aero
Founders: Eric Peck and Joshua Tepper
Location: Melbourne
Swoop Aero is an impact-focused, for-profit, autonomous drones company that has created whole aerial networks to deploy medical supplies and other services to remote communities.
The team has developed and owns its full stack of hardware and software technology – something that is an incredibly important asset to have, but one that hasn’t exactly been cheap to develop.
In 2022, Swoop Aero closed a $16 million Series B raise, to generate growth and scale in the international market. But it has also used Tractor debt funding to purchase the physical components needed to get more drones airborne more quickly.
As founder Eric Peck explains, because repayment is based on revenue, the gap between deploying capital and seeing returns is reduced.
“[Tractor] allows us to align when the asset is generating revenue with when we’re paying for it.”
The costs of a Tractor non-dilutive loan is be based on a few metrics:
Typically, the longer the repayment period, the more you will ultimately pay for the loan. For some companies, however, the value of the revenue growth achieved more than offsets the additional cost.
If you’re unsure what kind of loan term would work best for you, reach out to our team to chat about your revenue goals and how we can help you get there.
If you’re looking for a more specific solution, consider taking a look at our invoice finance calculator, here.
We'd love to chat and see whether Tractor is the best partner for you.
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