Propell Holdings (ASX: PHL) is undertaking a convertible note raise for $2.8 million in funding aimed at helping achieve cash flow breakeven and profitability by the end of the 2023 financial year.
The Australia-based fintech company targets the nation’s 2.4 million small and medium enterprises (SMEs), frustrated with the banks’ slow and difficult lending processes and paperwork.
Demand is significant given 38% of these SMEs have indicated they are looking for new solutions in a market comprising of $423 billion in SME loans.
Funds from the convertible note will be used to scale the business and also to support the expansion of the lending book through hybrid capital underlay.
Reach Corporate has been named as the lead manager of the deal.
Propell’s client base has risen exponentially, growing from 320 to over 2,150 in Q4 FY22, marking a sixth consecutive quarter of at least 30% growth quarter-on-quarter.
The convertible note has a 30-month note term, with 10% interest.
The conversion price is set at a discount of 20% to the 30-day volume-weighted average price (VWAP), with Propell last trading at $0.056 per share.
There will be an option to convert or redeem as well as seven bonus options issued upfront for each $1 investment.
After seeking a trading halt on 4 July, the company has now sought after a voluntary suspension in order to finalise the agreements surrounding the raise.
It expects to make an official announcement on the raise by 11 July.
Experiencing significant growth
For the June quarter, Propell lending volumes expanded to $3.4 million, with May and June being the largest months on record, up 35% on the previous quarter.
The average loan size sits at just under $20,000 now.
Propell has also seen vast improvement in other areas such as customer acquisition costs and loss rates.
It believes its product is well established to minimise any future investment in tech developing and marketing.
The company says it is poised to readily reveal more products, allowing the possibility to develop further revenue streams.
It aims to become the go-to finance solution for small businesses in a bid to reach 100,000 clients in five years.
Propell will lean on its tech advantage, allowing scalability to deliver its suite of lending products to a large and growing customer base.