L.O.T.W. #141 - Nerdy Gets Smart with New Growth Capital Term Loan
Structured term loan from Hercules Capital bolsters Nerdy's balance sheet as the company drives towards non-GAAP profitability.
In November 2025, Nerdy Inc. entered into a term-loan agreement with Hercules Capital, Inc. for up to $50 million, of which $20 million was funded at closing. The four-year facility matures in 2029 and features a 36-month interest-only period (extendable by 12 months), followed by principal + interest amortization. The loan is secured by substantially all of Nerdy’s assets and carries customary affirmative and negative covenants and a delayed-draw feature to help manage carrying costs and draw when needed.
👓At a Glance
Origination Date: November 3, 2025
Borrower: Nerdy, Inc. and subsidiaries
Lender: Hercules Capital, Inc.
Deal Size: $50.0 million
Structure: Two tranche term loan with a TTM contribution margin borrowing formula governing total debt outstanding
36 month interest only, extendable to 48 months upon achievement of certain performance milestones
Borrowing base = TTM contribution margin multiplied by an applicable ratio as follows
Closing -> September 30, 2026: 1.0
October 1, 2026 -> September 30, 2027: 0.80
October 1, 2027 -> September 30, 2028: 0.70; and
at all times on and after October 1, 2028: 0.60
Rate: Variable, greater of Prime + 3.50%, or 10.75%
Term: ~48 months
Use of Proceeds: General corporate purposes
Source: Press Release
📷Borrower Snapshot
Sector: Consumer Discretionary
Subsector: Diversified Consumer Services
Commercial Stage: Revenue generating; LTM EBITDA (-)
Business Overview: Nerdy, Inc. is a leading education-technology company that transforms how learners of all ages engage with knowledge through its flagship platform, Varsity Tutors. The company’s proprietary, AI-enabled live-learning platform connects students to expert instructors across 3,000+ subjects and supports multiple formats—one-on-one tutoring, small group classes, large live sessions, on-demand study tools and adaptive self-study. Leveraging advanced data-driven matching, the platform uses AI to pair learners with the optimal expert and continually refine instructional delivery, aiming to improve outcomes and satisfaction. Nerdy serves both direct-to-consumer learners and institutional clients (schools, organizations) and is positioned to scale by combining technology, human instruction, and network effects in a growing online-learning market.
⚙️Structure & Terms
Source: SEC 8-K
Commitment: $50.0 million multi-tranche term loan
$30.0 million available at close ($20.0 million drawn at close)
$20.0 million available subject to the approval of lenders
Maturity: November 1, 2029
Collateral: First priority all asset lien
Rate: Variable, greater of Prime + 3.50% or 10.75%
Fees:
Due Diligence Fee - $75k
Initial Facility Charge - $300k; Tranche 2 Facility Charge - $200k
Prepayment Fee - 2.0% prior to 1st Anniversary, 1.0% prior to 2nd Anniversary; 0.0% thereafter
End of Term Charge - 7.5%
Financial Covenant:
Min. Qualified Cash - greater of a) $15.0 million, or b) qualified cash balance that results in remaining months liquidity of no less than 6 months
Great find! I didn’t even see this one!