Walk through any retail aisle, and the challenge for consumer-packaged goods brands is immediately visible: hundreds of competing products, each fighting for the same shelf space and the same shopper. For marketers, the question is differentiation. For asset-based lenders (ABLs) like JPalmer, the question is similar: how do we evaluate which CPG brands stand out from the dozens of funding requests we see each month?
After nearly two decades of underwriting food, beverage, wellness, and consumer brands, five criteria consistently separate the brands we fund from the ones we pass on. Here’s what asset-based lenders look for in CPG brands, and why each criterion matters more than founders often realize.
1. The Team Behind the Brand
Before we evaluate a product, a category, or a financial model, we evaluate the people running the company.
We look at the team’s track record, prior operating roles, how they’ve navigated past challenges, and how they’ve handled failure. Public wins are easy to find. We’re more interested in how a founder responds when a launch underperforms, a co-packer misses, or a key retail account pulls back.
Unlike traditional banks, ABL lenders tend to take a hands-on approach. We stay closely involved with clients and offer guidance as their businesses grow. As a lender, I see my job as having two responsibilities: providing capital and ensuring the loan is repaid. Over the years, I’ve learned that both goals are best achieved by partnering with good, ethical operators. Relationships built on trust, transparency, and shared values are the foundation of successful financing partnerships and ultimately, successful outcomes for everyone involved.
2. Clear Product Differentiation
In today’s crowded CPG landscape, new entrants must bring something meaningfully different to the table. Consumers have more choices than ever, and they gravitate toward products that offer clear, compelling benefits over alternatives they already trust.
Strong CPG brands can confidently answer three questions in one sentence each:
- Why should consumers buy this product?
- What unique benefit does it offer compared to what’s already on shelf?
- Why choose this over the competing options in the same set?
Without clear differentiation, even well-funded brands struggle to gain traction. We see this often in categories like better-for-you beverages, where dozens of brands chase similar consumer cues but only a few build real loyalty. Differentiation is what makes inventory sellable — and sellable inventory is what makes ABL work.
For a closer look at how this is playing out across the natural products space, see our recap of Expo West 2026 healthy food trends. [internal link: /expo-west-2026-healthy-food-trends]
3. A Credible Omnichannel Distribution Plan
Many emerging CPG brands launch through social and direct-to-consumer (DTC) channels. That approach is effective for speed-to-market, early consumer feedback, and proving product-market fit before committing to large retail commitments.
However, long-term success usually requires a broader strategy. Sustainable brands demonstrate a clear plan for scaling across both retail and e-commerce, with realistic expectations for each channel.
Asset-based lenders want to see:
- A thoughtful omnichannel playbook that evolves alongside the brand
- Realistic retailer pipeline and timing assumptions
- An understanding of how DTC unit economics compare to wholesale margins
- A clear view of how each channel affects the cash conversion cycle
The reason matters for financing. Different channels generate different kinds of receivables, with different payment terms, dilution, and chargeback risk. A brand that’s 100% DTC has very different ABL borrowing dynamics than one with $5 million in net-60 wholesale orders. Lenders are evaluating both the growth potential and the working capital implications of each channel mix. [internal link: /asset-based-loans-cpg-brands]
4. A Disciplined Financial Plan
ABL lenders place significant emphasis on a company’s financial strategy. Beyond product development, we want to understand how the business plans to grow, allocate capital, hire, and reach profitability over time.
Too often, brands focus heavily on product innovation but lack a detailed roadmap for achieving profitability. We look for:
- A clear plan for deploying funds, with line items, not just totals
- Realistic growth projections grounded in trailing performance, not best-case modeling
- A disciplined path from current losses to operating profitability
- An understanding of gross margin trajectory and the levers behind it
- Monthly closing of financial books to support accurate borrowing-base reporting
A strong grasp of the numbers signals operational maturity and readiness to scale. It also makes the borrowing base the calculation that determines how much availability a brand has under an ABL facility far easier to manage on both sides. For a full comparison of how ABL stacks up against earnings-based financing, see ABL vs. cash flow lending for consumer brands. [internal link: /abl-vs-cash-flow-lending]
5. Smart, Diversified Sourcing
Vision and category understanding matter, but operational resilience is equally important. Lenders carefully evaluate how a CPG company sources its ingredients, packaging, and finished goods.
Key sourcing considerations include:
- Who are the suppliers? Reputation, capacity, and financial stability
- Are those suppliers also serving direct competitors? Allocation risk during supply shocks
- Is the business overly reliant on a single source? Concentration risk in a single co-packer or ingredient supplier
- What are the lead times and minimum order quantities? How these affect inventory builds
- Are there documented contingency plans? Backup suppliers, safety stock, or geographic diversification
We want to see diversified supply chains and credible contingency plans to mitigate risk — especially in food and beverage, where a single ingredient shortage or co-packer disruption can stall an entire selling season. Brands that plan their seasonal inventory builds well in advance consistently navigate these pressures better than brands that source reactively. [internal link: /abl-to-fund-seasonal-inventory-builds]
What Asset-Based Lenders Are Really Underwriting
When founders ask what asset-based lenders look for in CPG brands, the honest answer is: we’re underwriting two things simultaneously. The first is the collateral, the quality of receivables, the eligibility of inventory, and the predictability of the cash conversion cycle. The second is the operating discipline behind those assets, because collateral only stays valuable if the team running the business knows how to manage it.
That’s why these five criteria: team, differentiation, distribution, financial plan, and sourcing show up in every credit memo. They’re not theoretical. They’re how we predict whether the inventory we’re financing today will still be sellable inventory six months from now.
While there are many factors ABL lenders consider when financing CPG companies, these five criteria are the most consistent across our decisions. They are how we move from “interesting brand” to “fundable brand.”
At the end of the day, ABL lenders are not just in the business of providing capital. We are partners in growth, committed to helping consumer brands scale successfully and sustainably without giving up the ownership they’ve worked to build.
Interested in learning whether asset-based lending is the right fit for your CPG brand? Connect with our team to start the conversation. New to asset-based lending? Start with The ABCs of Asset-Based Loans.
