SportsHero’s $1M Loan Facility Highlights Urgent Need for Capital Raise

Loan Facility Details and Terms

SportsHero Limited (ASX: SHO) has formalised a $1 million loan facility with private lender Colin Jee Fai Low, designed to provide flexible working capital support over the next year. The facility allows the company to draw up to $200,000 per month at its discretion, with a fixed interest rate of 10% per annum on the amounts drawn. This structure offers SportsHero a measured approach to managing liquidity, enabling incremental funding aligned with operational needs.

The loan term extends for 12 months, with repayment due either 14 days after a capital raise specifically aimed at repaying the facility or by 22 January 2026, whichever occurs first. This repayment condition underscores the company’s intent to refinance the debt through equity if market conditions permit, reflecting a cautious but proactive capital management strategy.

Context of Existing Financing Arrangements

This new facility complements an existing $500,000 loan arrangement with the same lender, from which SportsHero has already drawn $100,000. That prior facility remains available for drawdown until September 2025, indicating a layered approach to short-term financing. The company’s disclosure confirms one previous facility has expired, highlighting an ongoing reliance on these private loans to bridge working capital requirements.

While unsecured and reliant on a single lender, these arrangements provide SportsHero with immediate financial flexibility without diluting shareholder equity. However, the relatively high interest rate and short repayment horizon signal potential pressure on cash flow, emphasizing the importance of the planned capital raise to ensure sustainable funding.

Implications for SportsHero’s Financial Health

Securing this $1 million facility is a clear indication that SportsHero is actively managing its liquidity position amid operational demands. The ability to draw funds monthly up to a capped amount allows the company to avoid unnecessary interest costs while maintaining access to capital. Nevertheless, the fixed 10% interest rate is a notable cost, reflecting the risk profile perceived by the lender.

Investors should watch closely for the company’s progress on the anticipated capital raise, which will be critical to repaying these loans and reducing financial leverage. The timing and success of this equity raise will likely influence SportsHero’s credit profile and investor confidence moving forward.