Cirralto (ASX:CRO) to loan $2M to Invigo amid pilot program

• Cirralto (CRO) has entered into a strategic loan funding agreement with fellow fintech business Invigo
• Under the agreement, Cirralto will provide a fully secured loan of $2 million to Invigo on a six-month term
• The companies will also begin a pilot program of Invigo’s buy-now-pay-later and pay-by-instalment services, using Cirralto’s SpendaCollect product
• The loan agreement and pilot program will provide Cirralto with new income streams, and increase its average revenue per user
• Cirralto is up 5.88 per cent and trading at nine cents per share

Cirralto (CRO) has entered into a strategic loan funding agreement with fellow fintech business Invigo.

Under the agreement, Cirralto will provide a fully secured loan of $2 million to Invigo. The amount will be loaned on a six-month term, starting from the date that the loan funds are advanced. 

This funding will allow Invigo to leverage its existing loan facilities and capital structure, and expand its debt pool on a 10-to-one basis. This will enable the business to provide additional lending to its current and future customers. 

While Cirralto is providing the loan, the two companies will simultaneously begina a broad pilot program of Invigo’s business-to-business, buy-now-pay-later (BNPL) and pay-by-instalment services, using Cirralto’s SpendaCollect product.

The pilot program will include several retailers and manufacturers, including several hundred trading partners. The first phase will be delivered to a control group of roughly 200 wholesalers, manufacturers, and retail businesses, followed by an extension to a much larger client base in the second phase. 

The loan from Cirralto will provide the seed funding that Invigo needs in order to deploy its services to the customer base during the pilot program. The pilot program should run for up to three months, and go into full commercial release during 2021’s third quarter.

Overall, the loan agreement and pilot program will provide Cirralto with new income streams. Based on the applicable overall interest rate of 10.25 per cent, the company expects the $2 million loan to provide roughly $205,000 a year in annualised returns on investment.

During the six-month loan period, the pilot program should provide Cirralto with approximately $200,000. It’s also expected to provide $400,000 in annualised revenue, including interest income from the loan, payment fees from transaction processing and transaction lending fees.

These various income streams from lending are expected to result in consistent increases in Cirralto’s average revenue per user.

Cirralto’s Managing Director and CEO, Adrian Floate, commented on the company’s loan agreement and impending pilot program with Invigo.

“This is a big step for us as a business and comes at the end of a long road of collaboration with Invigo that was interrupted by COVID,” he said.

“We will use the pilot to perfect our delivery of lending solutions at the point of payment within the SpendaCollect and SpendaPay products,” he added.

Cirralto is up 5.88 per cent, trading at nine cents per share at 12:08 pm AEST.