The Mid-Market Funding Trap: Bridging the Gap Between Fast Money and Bank Financing

You’ve built something real, retail doors are opening, fans are loyal, and revenue is scaling. But your financing hasn’t caught up.

Early FinTech credit lines and revenue-based financing options once fueled initial growth. Yet as your business matures, those structures can start to feel restrictive, costly, and less reliable. Banks, meanwhile, often say you’re not quite ready or prove to be more difficult and time-consuming to work with.

Many founders find themselves stuck in what we call the Mid-Market Funding Trap, the stage where high-growth brands outgrow startup-friendly financing but aren’t yet ready for commercial bank lending.

This guide breaks down the three stages of CPG debt financing, what to watch for, and how to navigate the middle stage without losing control or momentum.

‍

Stage 1: Early-Stage Alternative Debt – Fast and Finite

In the early days, speed matters. FinTech credit lines or MCAs (Merchant Cash Advances) provide quick access to capital based on sales performance, ideal for fueling marketing, growth, and fulfillment.

Founder takeaways:

• Use this early credit to accelerate growth, but monitor cash burn closely.
  
• Build financial and operational systems early, so your foundation scales with revenue.

The limitation: These products fund short-term sales activity, not the full value of your business assets. When wholesale and retail orders expand, these models often hit a ceiling. The cost is much higher as they quote a monthly fee vs. an APR.

‍

Stage 2: The Mid-Market Capital Gap – Too Big for FinTech, Too Early for Banks

This stage typically includes brands with $10–$50 million in annual revenue, characterized by proven traction, expanding channels, and growing operational complexity. You need $2-$25M to fund inventory, production runs, and retail purchase orders, and that’s where many founders stall. 

The challenge:

•  You need capital that supports larger commitments like financing new purchase orders and seasonal inventory buys. 
• Early alternative lenders often have pricing and fee structures that become prohibitively expensive as those needs grow.
  
• Banks view high growth and thinner margins as risky.
  
• Early FinTech partners can’t scale with your needs.
  

You’ve graduated from fast money, but bank financing is still a few steps away.

‍Founder strategies:

• Prioritize visibility: Track receivables and inventory closely to forecast funding needs.
• Build discipline: Consistent and transparent monthly reporting prepares you for institutional financing.
  
• Choose flexibility and sensible pricing: Find a partner whose credit line grows with your assets, not one whose fee models strip margin as order size grows.
  
  

Stage 3: Commercial Bank Financing – Low Cost, High Bar

Once your brand reaches scale, profitability, and steady cash flow, commercial bank financing becomes accessible and far cheaper.

Founder takeaways:

• Prepare early with detailed reporting and reliable operations.
  
• Treat this as a graduation; banks favor founders who built financial discipline in Stage 2.

‍

The Bridge: Asset-Based Lending Built for Growth-Stage CPG Brands

Most brands get stuck in Stage 2, waiting for banks to catch up. The smartest founders build the bridge instead, using asset-based lending (ABL) designed for their next stage of growth.

How Assembled Brands helps:

• Scalable: Credit lines grow with your business, typically up to $25M, based on your accounts receivable and inventory.
  
  
• Flexible: Advance up to 85% on receivables and up to 70% on inventory, with no lockboxes, guarantees, or restrictive covenants.
  
  
• Non-dilutive: Maintain full ownership and control while unlocking working capital.
  
  
• Foundational: Build the financial discipline and credibility that banks look for when you’re ready to graduate.
  
  

In short, Assembled Brands is the next step for founders who’ve outgrown FinTech lenders/MCAs but aren’t yet ready for a commercial bank. We bridge that middle stage, providing the capital structure you need to scale confidently.

‍

What This Means for Founders

You’ve built a brand people believe in. Now it’s time for financing that grows with you, providing:

• Liquidity when you need it most.
  
• Flexibility without dilution.
  
• A clear path to institutional scale.
  
  

The Mid-Market Funding Trap doesn’t have to slow your growth. With the right capital partner, you can maintain momentum, stay in control, and prepare for a successful graduation to commercial bank financing.

‍

Next Step

If your brand has outgrown startup financing but isn’t bank-ready, you’re not alone. The difference between brands that stall and those that scale is the quality of the bridge they choose.

At Assembled Brands, we provide flexible, scalable asset-based lending solutions designed for high-growth consumer brands. By advancing up to 85% on receivables and 70% on inventory, we help founders maintain liquidity, control, and credibility, positioning them to move confidently into commercial bank financing when the time is right.

Your momentum deserves capital that scales with you.

Connect with our team to learn more about how Assembled Brands can help. 

‍