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Bizo has taken on $12.5 million in debt financing from City National Bank. The money adds up to a cheaply accrued rainy-day fund for a company that last year raised $10 million in funding and expects to close the second quarter on a $40 million annualized revenue run rate and cross into profitability by year’s end.

“When we looked at how low cost bolstering our balance sheet was, we decided regardless of where the business is going we need to do this because it gives us so much option value. If we want to make an acquisition or decide to invest heavily in something ahead of the curve, we can,” said Bizo CEO Russell Glass.

The money came cheaply for two reasons. “It’s a combination of there being a lot of money on the sidelines that hasn’t been invested,” and lending banks would rather rack up interest revenue by backing a growing company versus signing off on someone’s mortgage, Mr. Glass explained. Plus debt financing provides that capital without diluting the shares of Bizo’s existing investors, as a typical equity funding round might have.

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