Gerber Finance Launches Natural Products Division

Citing ongoing growth in the natural CPG market, asset-based lending company Gerber Finance this week announced it would launch a dedicated natural food and beverage products division.

As an asset-based lender, Gerber Finance provides financial credit in exchange for collateral such as inventory, accounts receivable or intellectual property. The model is often used by small or medium-sized businesses to cover near-term financial needs.

Based in San Francisco, Naturally Gerber Finance will work with natural and organic food and beverage brands as well as service providers like sustainable design and packaging firms. Among its 50 current CPG clients across all categories, the company has partnered with 24 food and beverage brands and suppliers, including tea company Numi Organics, gut health brand Farmhouse Culture, Asian products brand Nona Lim and supply chain service provider Choice Logistics. In the coming year, the new division will add 20 to 25 more food and beverage clients.

The division will be run by Andrew Hollingsworth, the former CFO of Numi, who joined the firm earlier this year. According to Gerber Finance CEO Jennifer Palmer, the debt financing model can appeal to CPG brands because it not only provides more flexibility than institutional lenders, but also allows emerging brands to retain ownership while helping fund the expenses that come with running a food and beverage business.

“Debt can be temporary and easier to unwind,” she said. “It’s a very nice option for companies who are growing very quickly and need working capital, but don’t want to give up equity.”

The launch, Palmer noted, comes at an ideal time as the natural CPG industry is growing “year-on-year and day-on-day.” According to Palmer, who was promoted to CEO of the 25 year-old company in January of this year, the team has been monitoring the food and beverage industry for over a decade, ultimately taking on Madelaine Chocolate Novelties as its first food client in 2012.

Gerber Finance issues asset-based lines of credit ranging from $500,000 to $20 million to companies generating between $2 million to $100 million in annual revenue, with most of the firm’s clients reporting $20 to $50 million in annual revenue. Palmer noted the top criteria for the firm’s partners includes profitability, mission and personality. The latter two are particularly important, she said, because Gerber seeks to develop ongoing relationships with brands and become a “long term partner.”

“We want to hear the good, bad and ugly,” she said. “Only by hearing all of that can we help clients make intelligent decisions and be there for them.”

For Numi, which has remained a client for the past seven years, the firm’s funds helped the brand navigate seasonal sales spikes and build an omnichannel business, said Hollingsworth. In recent months, Palmer said Gerber has increasingly helped brands build out ecommerce programs — and will continue to be “aggressive” in doing so.

The ongoing COVID-19 pandemic has demonstrated the need for debt-based financing, Palmer said. For example, brands increasingly are finding themselves with unplanned expenses around growing ecommerce platforms, from technology development to setting up logistics. Additionally, she predicted that the changing economic climate will depress access to bank loans and investors’ appetites to place capital in CPG brands.

“Banks are going to be much more conservative,” she said. “People will turn to our side of the financing world and become more interested in it. We make our own rules so we can break them.”