Gerber Finance

By Taylor Mallory
As a small business grows and entrepreneurs begin to consider financing, there are many options, some far shadier and more expensive than others. There are horror stories about asset-based lending, as it can involve higher costs than traditional bank financing – which a new business may not qualify for or may not have time to wait for – and can be devastating in the hands of a disreputable lender. But those who find the right lender who will work to meet their needs may not only secure the necessary financing but may also accelerate their growth and realize their potential was greater than they imagined.

Here, a home accessories fashionista and an intimate apparel entrepreneur tell PINK how asset-based lending helped them finance their rapidly growing companies.

Marlo Lorenz, CEO, Thro
When Marlo Lorenz started Thro, a home accessories design and manufacturing company for fashion-forward throw pillows and blankets, she knew her product had potential. A home accessories buyer from Saks Fifth Avenue lauded her designs and she had orders from several top retailers. But she quickly found herself struggling to keep up with her own success. Thro had received orders for thousands of throws in the first few months of existence and faced a fulfillment nightmare.

As orders piled up, she knew she needed help. “I remember sitting in my garage at my design table trying to figure out how many throws I would need to sell to make a profit,” says Lorenz. “It was clear that I needed an outside financing partner.”

She asked friends and researched various financing options and found a small lender that specialized in financing entrepreneurial growth. Most importantly, the financier did not require years of financial statements and could move quickly to meet Lorenz’s time-sensitive needs.

Within five years of working with her lender, Lorenz had grown Thro into a multimillion-dollar business with a very healthy line of credit. Thro’s impressive growth now made it an attractive client to mainstream banks. So after several discussions with her (supportive) lender on the best next step, Lorenz decided to begin financing Thro through a large bank.

After six months of working with the bank, Lorenz was unhappy with the relationship. The bank’s traditional bureaucratic structure didn’t allow for the exceptions a burgeoning business like Thro needed to achieve growth. “The bank didn’t appreciate our goals or truly understand our cash flow and sales cycles. Worse than that, they didn’t try to understand,” says Lorenz. “We couldn’t focus on growing our business because we were too worried about having enough money to fill orders.”

Within a year of leaving her original lender, Lorenz called its CEO, with whom she had maintained close contact, and renewed the business relationship.

“We needed the comfort and flexibility of a niche lender, who was invested in our goals and made time to understand how our business works,” says Malte Lorenz, Marlo’s husband and CFO of Thro. “If you have a traditional company that fits the bank’s formula, their system may work for you. But that certainly wasn’t the case for Thro.”

With her original lender, Lorenz has extended her business to include a new, high-end line called Marlo Lorenz which will be sold in specialty retailers and fine department stores nationwide.

“Nine years ago, when I started this business, I couldn’t have imagined the success we’ve achieved,” says Marlo. “Now I see my pillows on the shelves of top retailers nationwide and I have to pinch myself. So much of where we are today is thanks to steady growth. We’re in this for the long haul.”

Bonnie Shepherd, VP of Operations, Le Mystere
Women know a bra that fits perfectly can make all the difference. So when Le Mystère, a growing intimate apparel company focused on “perfect fit”, hit a rapid growth pattern in 2001, it needed to find its perfect fit in a lender.

The wide expanse of bra sizes (32A-42G) and array of styles, coupled with long purchasing lead times, make it necessary for Le Mystère to carry huge amounts of inventory year-round. Though business was booming and the company’s finances looked promising, Shepherd’s existing bank refused to loan against inventory collateral.

“Our fit philosophy helped us quickly penetrate the retail environment,” says Shepherd. “But to ensure that our client relationships would last, we needed to be able to purchase tremendous amounts of inventory to fill orders in a timely manner – and that required a healthy line of credit.”

Le Mystere found a niche lender that specialized in financing inventory. Le Mystere’s new financing model allowed them to use their bras as collateral for a credit line of just under a million dollars – which made it possible for the company to purchase additional inventory and fund the sales and marketing practices needed to grow a successful consumer brand.

Since 2001, Le Mystère has tripled their revenues and grown into a multimillion-dollar company that still maintains several million dollars of credit. The brand is available at fine retailers including Neiman Marcus, Nordstrom, Saks Fifth Avenue and numerous specialty boutiques – where it is often the top selling brand. It has now extended the line to include additional intimate apparel products and plans move the brand outside of intimate apparel in the coming year.

“Our financing keeps us on track for growth,” says Shepherd. “Were it not for our lender, we would be three years behind where we are today.”