Beauty Founders Weigh Debt Options as Lenders Push Asset-Based Financing

While equity funding often dominates conversations in the beauty industry, debt can be just as important when managed correctly. Lenders at SG Credit Partners say the key is securing the right amount from the right lender at the right stage of a brand's growth.

A typical client is preparing to enter retail or has already launched in stores. Many arrive with fintech debt tied to revenue or purchase order financing for inventory. Once a brand has meaningful accounts receivable and inventory, SG Credit can lend against those assets, offering more flexibility than a fintech.

As brands scale, the firm can extend lending beyond receivables and inventory into intellectual property term loans. Fintechs serve a role, but several have collapsed in recent years, including Ampla, which many beauty brands used. Because SG Credit lends against assets rather than revenue, a slow month does not automatically shrink borrowing capacity.

The firm looks for companies past the proof-of-concept stage that need a lender comfortable with customer concentration common in beauty, such as 100% reliance on Sephora, Ulta, or another major retailer. Traditional banks typically avoid that level of concentration, but SG Credit views it as a strength, noting that brands often succeed by focusing on one retailer.