Equity Isn't the Only Way to Fund Your Brand's Growth
By Marshall Lebovits, Asset Based Funding Solutions - 35+ years helping growing companies access working capital tied up in receivables, inventory, and equipment.
If you're running a CPG brand between $2M and $50M, you know the feeling. Sales are moving. Retailers want more product. But your cash is tied up in inventory you've already paid for and invoices that won't clear for months. So you start thinking about raising equity again.
That instinct makes sense - but equity may be the wrong tool. A lot of the cash crunches that send founders back to the cap table aren't equity problems at all. They're working capital problems wearing an equity costume. Solving a working capital problem by selling more of your company is one of the most expensive habits in any industry.
Worth noting: debt serves many purposes - real estate and equipment financing or long-term capital for businesses with strong historical cash flow. But founders reading this are often pre-EBITDA positive, which is exactly where working capital financing matters most. That's the focus here.
Know whether you have a loss problem or a working capital problem
This is the distinction everything else hangs on. A cash need driven by losses and one driven by working capital look identical on a bank statement but require completely different solutions. If your business is losing money, that shortfall drives the need for equity - or an equity-like structure such as a SAFE note or a convertible note. If your cash is simply trapped in receivables and inventory, that's a working capital gap and debt may be the cleaner tool.
One question to answer before you talk to anyone: is this gap because we're spending more than we make, or because the cash we've earned just hasn't shown up yet?
Understand what asset-based funding actually does
Asset-based funding is a category of capital that gets overlooked because founders think it doesn't "solve a big enough problem." That framing is backwards. Asset-based funding - purchase order financing, accounts receivable financing, inventory financing - isn't meant to fund losses or replace equity. It's meant to unlock working capital already sitting inside your business.
What sets asset-based funding apart from revenue-based products is how availability gets calculated. Instead of a formula built on trailing revenue, you're borrowing against a percentage of specific collateral - open purchase orders, invoices, or inventory. And because the facility is revolving and scales with your assets, it grows alongside the business rather than locking you into a fixed payment that ignores your cash flow timing and growing cash needs. A delayed shipment, a canceled order, a production setback - revenue-based funding punishes you for that. Asset-based funding doesn't.
Match the money to your order-to-cash cycle
Say you're at $4M in revenue and about to walk into a major retailer. The first thing to map isn't just when the retailer pays you - it's the entire timeline from the moment you pay your suppliers and co-man, through freight, all the way to the day cash lands in your account.
When there's a real lag between paying for production and collecting from the retailer, PO financing can be the right entry point - it funds production before an invoice even exists. Once goods ship and you've billed the retailer, that converts naturally into receivables financing, which typically carries a lower cost and higher advance rate.
Two things catch first-time retail founders off guard. The first is timing: Net 30 quietly becomes Net 60 or Net 90. Asset-based financing is built to bridge that wait. The second is dollars: trade spend and chargebacks can reduce what you actually collect to 75% of what you billed, or less. That's not a financing problem - it's a reminder to understand your true net collectible before deciding how much to borrow against an invoice.
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Your operations are part of the underwriting
IFounders assume funding is primarily a finance conversation. With asset-based lenders, it's equally an operations conversation - and that means two different things.
Factory operations matter because lenders are underwriting whether you are selling at a gross margin that supports a viable business and whether your finished goods would be remarketable in a liquidation scenario.
Back-office operations matter because lenders are underwriting the quality of what you report. Accurate, timely books. A/R and A/P aging reports that reflect reality. Distributor agreements that are documented and understood - including any guaranteed sales provisions, trade spend commitments, or chargeback exposure that could reduce what actually comes in the door. Poor credit and collections practices and inconsistent bookkeeping all surface in due diligence and either slow a deal or kill it.
Asset-based lenders have more patience with growing pains than a bank would - but only as long as collateral quality holds. Tight operations on both fronts don't just keep the business running. They make you fundable.
Before you talk to a single lender, get your house in order
Pull together current income statements, balance sheets, and cash flow statements - then go further: A/R and A/P aging reports, inventory detail, and an honest read on your order-to-cash cycle. A lender may ask for every bit of it, and how quickly and cleanly you can produce these reports signals whether you're ready for a capital partnership at all. More deals fall apart over financial reporting than almost anything else - not because the business was bad, but because the company couldn't produce accurate, timely numbers when it counted.
The point isn't to avoid raising. It's to raise less dilutive capital, later, and on your terms.
Used well, debt doesn't compete with equity - it reduces how much you need to dilute and stretches the runway between rounds, so when you do raise, you're doing it from strength.
Two examples. I arranged an asset-based line for a beverage brand that helped them scale from $15M to $45M in under four years - the line tripled alongside them, and the founders held far more of their equity heading towards an exit. More recently, I secured invoice financing for a female-owned CPG brand launching nationally into Target, a deal projected to triple their revenue in the next 12 months. In both cases, the capital wasn't just about liquidity. It was about giving founders the runway to execute without giving up more ownership than they needed to.
That's the whole game: keep building, keep more of what you build.
Marshall works on a success-fee only basis. In over 95% of transactions, the lender covers his fee - so founders get experienced guidance without adding to their cost structure.
About Bravo CPG
This article was produced in partnership with Bravo CPG, an embedded operations team for growth-stage food, beverage, beauty, and wellness brands. Bravo combines hands-on execution with senior-level ownership, taking full responsibility for production, co-man and 3PL management, demand planning, wholesale orders, freight, and more. Much of what makes a brand fundable is operational, the clean receivables, the documented co-man relationships, and the accurate, timely financials that let a lender say yes, which is exactly the groundwork Bravo helps brands put in place. Their goal is simple: help you scale profitably without the operational chaos that quietly closes doors with capital partners. If you're thinking through your next stage of growth, the operations are where it starts.
