Beyond the Bank Loan: Why Asset-Based Lending is a Game-Changer for Scaling CPG Brands

The Growth Trap: Why Scaling CPG Brands Need Smarter Capital

Your CPG or ecommerce brand is gaining momentum, with products flying off shelves and demand soaring. But how do you fund that explosive growth without hitting a wall? Scaling means navigating complex supply chains, managing fluctuating inventory, and seizing market opportunities, all demanding agile, substantial capital.

Often, traditional financing just doesn't fit. Conventional bank loans can be rigid, often tied to past performance rather than future potential. Many financial institutions operate on models that are fundamentally “old school,” failing to assess the unique dynamics of ecommerce accurately. They often don’t account for online sales cycles and are not inclusive of Amazon inventory as viable collateral. And giving up more precious equity to venture capitalists can dilute the very ownership and vision you've worked so hard to build.

What if you could turn your existing assets into immediate working capital? What if your financing needs grew with your business? That is where asset-based lending steps in. This guide reveals why ABL isn't just another loan; it's a strategic game-changer, built to fuel the ascent of ambitious CPG brands.

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The CPG Growth Stages: When Capital Becomes Key

A CPG brand's financial requirements evolve dramatically through its lifecycle:

Early-Stage (Seed/Startup): At this initial phase, funding primarily supports product development, market validation, and securing initial production runs. Capital might come from founders, friends and family, or early-stage angel investors.
Growth-Stage (Scaling Up): This is where the capital demands truly accelerate. As a CPG brand moves beyond initial traction, it needs significant funds for increased production volumes, expanding into new retail channels (both brick-and-mortar and e-commerce), launching impactful marketing campaigns, and developing new product lines. This phase is often the most capital-intensive, requiring flexible and substantial working capital.
Maturity & Expansion: For established brands, capital might be needed for sustained growth, strategic acquisitions, or diversification into new categories.

It's during the critical "Growth-Stage" that many CPG brands find bank financing models restrictive, making ABL a true game-changer.

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Understanding Your Funding Choices: Conventional and Alternative Paths

Let's briefly compare ABL to other common financing options:

1. Venture Capital (VC): Offers large capital infusions and strategic guidance but is dilutive, meaning founders give up ownership. Best for highly disruptive brands seeking aggressive market share.
2. Conventional Bank Loans: Non-dilutive with predictable costs, but often come with lockboxes, and slower approvals, lacking flexibility for dynamic CPG growth.
3. Business Credit Cards: Can be useful for small, short-term expenses or bridging minor cash flow gaps. However, they typically have high interest rates, low credit limits, require personal guarantees, and are not designed to provide the substantial, scalable capital needed for significant CPG expansion.
4. Crowdfunding: Great for building brand loyalty and validating new products, but provides limited capital and isn't designed for large-scale operational funding.

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Asset-Based Lending (ABL): The CPG Game-Changer

ABL is a specialized form of financing that lets companies secure credit based on the value of their assets, primarily accounts receivable (AR) and inventory. Unlike conventional loans focused on past cash flow, ABL looks at what you have in motion right now – your products and your invoices – to determine your borrowing power.

How it Works: ABL uses a "borrowing base" formula, directly tying your loan amount to a percentage of your eligible assets. For CPG brands, this means leveraging your outstanding invoices (accounts receivable) and your finished goods, raw materials, and work-in-progress inventory. For instance, you might receive up to 85% on eligible accounts receivable and up to 80% on net orderly liquidation value (NOLV) of inventory, often up to 70% on finished goods.

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Why Partner with Assembled Brands for ABL?

Assembled Brands offers solutions tailored specifically for high-growth CPG brands, providing unique advantages designed to fuel your expansion:

Non-Dilutive Capital: Our growth lines of credit allow founders to retain 100% ownership and control of their brand. You don't give up equity, ensuring your vision and hard work remain yours.
Capital That Scales With Your Growth: The amount of capital available to you grows as your sales increase and your inventory builds! This "accordion" feature directly aligns with your growth trajectory, providing more capital precisely when you need it most. Use it for seasonal builds, new product launches, marketing, and more.
Faster Access to Funds: Because our lending decisions are primarily based on the quality and liquidity of your assets, Assembled Brands offers quicker approvals compared to the often lengthy processes of conventional cash flow-based loans. This speed can be critical in a fast-moving market.
Turn Inventory into a Growth Engine: CPG brands naturally carry significant inventory. With asset-based lending, that inventory doesn't just sit in a warehouse; it works for you. These assets, which might otherwise sit idle on your balance sheet, become powerful collateral for immediate cash.
Direct Working Capital Support: Assembled Brands directly converts illiquid assets such as inventory sitting in a warehouse or invoices waiting to be paid into immediate cash. This directly funds crucial operational needs such as purchasing raw materials, scaling production, investing in marketing, and managing day-to-day expenses.
Founder-Friendly and Flexible: Assembled Brands offers flexible growth lines of credit that are designed to be founder-friendly. This includes features like no personal guarantees for the principals, which significantly reduces personal risk, and no lockbox requirements, meaning you maintain direct control over your cash flow.
Bridge to Future Financing: Our working capital allows CPG and ecommerce brands, to grow to a size and profitability that makes it more attractive for other, potentially larger, forms of financing down the line. We also include inventory located at Amazon in your borrowing base. Furthermore, our flexible structure means we can provide additional financing on top of the ABL, offering the runway needed to achieve key milestones.

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ABL in Action: Real-World CPG Scenarios

Consider how ABL can directly address common CPG challenges:

A. Powering Seasonal Swings: A CPG brand preparing for holiday sales needs to produce inventory months in advance. ABL provides the capital against this growing inventory, allowing production to ramp up without draining cash reserves.
B. Bridging Retailer Payment Gaps: Many large retailers operate on 60- or 90-day payment terms. ABL allows CPG brands to leverage these outstanding accounts receivable, converting them into immediate cash to cover payroll, supplier payments, or new orders.
C. Fueling New Product Launches & Market Expansion: Introducing a new SKU or entering a new geographic market requires significant upfront investment in production and marketing. ABL provides the working capital needed to scale these initiatives without diluting ownership.
D. Meeting Surging Demand & Supply Chain Needs: When orders surge unexpectedly, a CPG brand needs immediate liquidity to procure more raw materials, increase manufacturing capacity, and manage logistics. ABL's scalable nature ensures capital can meet these demands, ensuring continuous product availability and supply chain optimization.

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Choosing Your Path: When ABL Shines Brightest for CPG Businesses

ABL can be the optimal choice for CPG brands that:

Have strong sales growth but tight cash flow due to inventory and receivables
Have substantial inventory and/or large volumes of accounts receivable on hand
Are past the initial startup phase (typically 18+ months in market, $7-10M+ in revenue), growing top and bottom line, or profitable/break-even.
Value retaining ownership and need flexible capital that scales with their operational growth

ABL can also complement other financing types. When choosing an ABL partner, look for industry expertise, a founder-friendly approach, flexible terms, and transparent reporting.

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The Bottom Line: Fueling Your CPG Future with ABL

For high-growth CPG brands, asset-based lending offers a uniquely powerful, non-dilutive, and flexible solution. By leveraging your inventory and accounts receivable, ABL provides capital that scales with your growth, without personal guarantees or lockbox requirements.

Assembled Brands empowers CPG founders with founder-friendly, flexible growth lines of credit. Our asset-based loans provide the working capital to navigate seasonal demands, expand distribution, launch new products, and achieve ambitious growth targets while maintaining full control.

Discover how ABL can be the game-changer for your CPG brand. Apply today!

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