Finance company Butn has secured additional funding but it will pay more than 10 per cent interest to keep its receivables book growing. With interest costs continuing to rise, the business model for companies like Butn is under scrutiny. How much of their increased funding costs can they pass on to customers and how much of their increase in receivables is just profitless growth? The company announced yesterday that it raised A$4.75 million from holders of its 2019-1 bond. The $3.8 million of A notes are priced at a fixed rate of 7.25 per cent and the $450,000 of B notes are priced at a fixed rate of 10.25 per cent. The notes mature in July 2025. Butn provides a form of invoice finance to SMEs and receivables are usually settled on terms between 30 and 90 days. With the high turnover of the book, Butn estimates that the new funding will give it $25 million of additional annual origination capacity. During the six months to December, Butn originated $214 million of finance, an increase of 68 per cent over the previous corresponding period. It finished the half with receivables of $75.5 million. Receivables growth generated a 115 per cent increase in revenue – up from $2.5 million in the December half 2021 to $5.5 million in the latest half. But the company made a loss of $2.9 million, with the biggest expense item an increase in finance costs from $1.6 million in the December half 2021 to $2.9 million in the latest half. One positive for the company, contrary to commentary that investors are no longer backing loss-making financial services growth businesses, is that it is still supported by its debt and equity holders.  In addition to the $4.75 million bond top-up, the company raised $2 million of equity capital earlier this month through an issue of shares to funds managed or advised by Regal Funds Management, a long-standing institutional investor in the company.