rake test returns NoMethodError: undefined method `[]' for nil:NilClass

First off we have an empty database.yml, all configurations are in application.yml using Figaro gem.

My team is in the process of upgrading to rails 4.0.0 from rails 3.2.0

when running guard or rake test, I get the following error.

rake aborted!
NoMethodError: undefined method `[]' for nil:NilClass

Tasks: TOP => minitest:run => test:prepare => db:test:load => db:test:purge
(See full trace by running task with --trace)

I added this to our Application controller => Figaro.load

Now I can run guard but rake test still fails with the same error.

Thanks for your help.