Using Debt to Grow a Successful CPG Business with Emily Reeves, Vice President of Capital Solutions at Bridge

Nick: 00:00:02

There are a million ways to make money in the food service industry. You just have to find one.

On the Titans of Food Service podcast, I interview real life movers and shakers in the food game who cut through all the noise to get to the top. My name is Nick Portillo, and welcome to the Titans of Food Service podcast. Let's jump right into it.

Welcome back to another episode of Titans of Food Service. I'm your host, Nick Portillo. Thank you again for joining me here.

Please, if you enjoy the show, if you could leave me a five star review, that would mean a lot. Whether you follow along on Spotify or Apple Podcasts or anywhere you get your podcasts, that just really helps the show and our reach. Okay.

Today I'm joined by Emily Reeves. She is the Vice President of Capital Solutions at Bridge.

In: 2025

She specializes in showing CPG brands how to scale with debt while protecting their equity, whether that's through SBA loans, supplier funding, or financing massive retail orders from giants like Walmart. In this episode, we pull back the curtain on how the financing strategies most founders overlook.

She shares practical tactics for negotiating with lenders, decoding term sheets and unlocking underused tools that can push expansion across the finish line.

If you've ever wondered how to fund your next stage of growth without giving away too much equity and you've come to the right place, let's go ahead and welcome Emily. All right, Emily, welcome to the Titans of Food Service podcast. I appreciate you taking time to come on and meet with me, man.

Emily: 00:01:41

Nick, it's fantastic to be here. I'm looking forward to it. Yeah.

Nick: 00:01:45

And I know we're talking a little bit off camera, that you're a Yankees fan and have some familiar history with the Yankees, which is way cool. And you're in the Northeast now. Where in the Northeast do you live?

Emily: 00:01:56

So I split my time between New York City and Tropical Kansas City, Missouri, of all places. But I grew up in the Northeast. We are, again, Roman Catholic Italians who are all from New York.

Nick: 00:02:09

Nice. What makes Kansas City tropical?

Emily: 00:02:12

Nothing. Not a single thing. Not a single thing. It is. I love Kansas City. And I don't, you know, it's. It's been home for a little while now.

I moved out to Kansas City to work at this fintech startup, which sounds like an oxymoron unto itself, but I've been here for five years. But there's something to be said for those in Office dynamics.

I, I love getting to sit in a room with everyone that we're collaborating with as we continue to build Bridge.

Nick: 00:02:39

Yeah, I love that. And how did you get involved with Bridge?

Emily: 00:02:43

So I've been working with, helping finance CPG companies for the last decade of my career and through our corporate partnerships at Bridge, through Walmart, Dollar General and others. I work with a lot of consumer based companies that are anywhere from the food space to health and beauty.

And it just made sense to kind of come in and continue to support these suppliers.

Nick: 00:03:06

I like it. And how did you, how did you get into this industry?

Emily: 00:03:09

Oh, man, I started in factoring. So that is AR or Accounts Receivable Based financing. And no one grows up wanting to work at a factoring company.

Even people that are in the industry now will tell you that. But it is a very unique loan product. So I really got to cut my teeth on asset based lending and continue to grow from there.

So went from factoring to revolving lines of credit, asset based lending where you're leveraging your inventory and your AR and your cash flow to then supply chain financing, which is a new innovative product in the market these days where you're able to finance your receivables directly through your customers.

So I have become a professional, know it all, not only on all loan products out there, but I have talked to thousands of businesses in my career and that is some of the best part of what I do is I get to learn a little bit about everything. I spend my days on the phone with founders just picking their brains on the challenges and the successes.

Is there something about this founder mentality that's always spoken to me that you're crazy enough to do this? Tell me more.

Nick: 00:04:16

Yeah, I like that. We're actually going through the, the SBA loan process right now. We're acquiring an office space in Nevada, in Las Vegas.

We have a opening up a new office there.

So going through that whole process and you know, it's, it's, it's a lot of work to go through that, but it's, it's cool that those types of vehicles are there for, you know, businesses to take advantage of to expand their business.

Emily: 00:04:40

Yes, that whole process is putting it kindly. I'm sure you've been working on this for months now. It is not the easiest process.

I like to joke that when you go sba, you are combining two of the slowest moving entities, banks and government. But my gosh, is it a good loan product once you get through it, it's some of the best out there.

Nick: 00:05:00

Yeah.

You know, and without, you know, compared to like a conventional loan, the amount that we have to put down or the percentage we have to put down is significantly less. And the terms are pretty good. But you're right, I mean, the amount of paperwork that we've had to shuffle through over the last couple months is.

Emily: 00:05:16

More than blood samples. It's coming.

Nick: 00:05:19

Yeah, exactly. Exactly. So how did you get tied into the CPG side of the business, of the food business?

Emily: 00:05:28

For the most part, CPG companies are very capital intensive. And you have two options. You can dilute yourself and give up equity, or you can source debt.

And not all debt is created equal, but for the most part, all equity is. And so I'm a big proprietor of debt. I'm definitely biased, but I love to come in because CPG founders are so passionate.

It is their hobby, their passion, their baby.

And when you start to dilute yourself through equity, you start to lose a little bit of that and you start to lose the control that made everything important to you. You start to lose your vision, your goals. And especially early stage CPG companies will give up so much for so little.

And it's not until you really start to hit success in that third, fifth, even 10th year that the ramifications of the dilution really come to the forefront. So I spent again, we kind of talk about this fintech startup in Kansas City.

We were doing supply chain financing for a lot of big box retailers like Walmart, Costco, TJ Maxx.

So I spent five years of my life talking to suppliers that were selling to these big box retailers and just the challenges that they faced daily with cash conversion and just cash flow as a whole.

Nick: 00:06:48

If I'm a new, if I'm a startup CPG company, you know, I'm a founder, let's say, and let's say I have no history of sales, but I've got this great product and an idea. How do you qualify if someone is a good candidate to receive, you know, a loan?

Emily: 00:07:05

Well, you hit the nail on the head. But part of that question is idea. That's where it gets tricky. You can't finance an idea, but you can finance an individual.

And that is where the SBA can be a good loan program. The SBA is going to look at the operator's capability, they're going to do a little bit more digging on your personal financials.

They're going to look at the equity that you have. You know, it's, it is really for startup phase idea. An SBA loan is really based on projections, it's based on you as an operator.

They're going to want to see financial models, you're going to want to see that you can really take something to market.

And that's really the only loan option that you're going to have is maybe an SBA loan or something that called a CDFI or community development institution fund where they have a little bit less requirements than the sba. You can have a lower credit score, maybe you can have less equity, but those are going to be your best two debt options.

Quite frankly, the best option for a founder who has this idea, and I love to say this is friends, family and fools.

Because if the people around you believe in you, they're going to give you five grand here, maybe a couple hundred bucks here to get this thing off the ground. That's really where you start. And then you start to prove out proof of concept. And that's where lenders can get more excited.

Nick: 00:08:24

So when you have an engagement with these CPG companies, are you taking, you're taking a portion of ownership with them or no, you're just giving them some sort of reimbursable note?

Emily: 00:08:36

We're not. So that would be how a safe note would function.

If you're going to go that route, if you're going to do an institutional funding round, what Bridge does is we help companies navigate the options in the market specifically around debt.

So if you are an established business, you've maybe even been functioning for six months, you have some sales performance, we can kind of talk through the phases of launch and what I typically see in the market. But we help companies navigate the best debt.

So we use a really sophisticated, easy to use tech platform that allows you to put your high level business details on the website.

Lenders start to review it, we also take a look at it and we start to say, okay, based on this, that and the other thing, this type of loan will make the most sense for you. There's a very technical term called sources and uses in lending.

And all that means is what are you going to use this loan for, what's it actually needed for? And how are we going to get you that? What are the sources for this capital?

Nick: 00:09:36

Interesting. Okay, okay, walk me through the phases.

Emily: 00:09:40

Okay, so you have this idea, you have decided that you the market needs press on nails. And not only does the market need press on fake acrylic nails that we can do at home because everyone's trying to save money.

No one wants to spend 200 every two weeks to do their nails. They're going to go to Target and they're going to buy $10 stick on nails. And the nails that you've seen on shelves don't excite you.

You know, you're not seeing anything that really speaks to you. So you as a founder say, I know I can do this better, I know I can do this differently. I have these incredible design ideas.

I can bring other people on to design things. I can partner with artists, but that's this idea. So then you start to look at execution of, okay, well, how am I going to deliver this?

Where am I going to get these nails from? Do I understand the supply chain? And hopefully they're asking themselves these questions. Do I understand the supply chain?

Do I know the implications of tariffs now and how much this is going to cost me? Do I have the margins to support this? And typically, most CPG companies will then go direct to consumer.

And there's so many avenues you can do that with these days, whether it's TikTok shop, whether it's doing a Shopify account. You and I can start selling something on Walmart Marketplace tomorrow. If we wanted to list a product that we have, we can put it on.

And that's going to be, I think, a big shift in buyers. We're not going to go to the stores as much. We are going to continue to go online on Amazon. And then you start to see your proof of concept.

To fulfill that first order, the founder has to ask themselves, okay, do I go big?

Do I buy $50,000 worth of inventory because the pricing is going to be so much better and really do a big launch, or do I maybe start small with a small investment of $5,000? I bring in the materials. I know I'm not going to sell them at the margin that I really want. You might even take a loss.

But you start to show this sell through data. You start to show, look, this is my customer, this, this is who buys this. And this is our velocity on these channels.

And that then opens the door to bigger box retailers. But you know, you can't go to Target or CVS and say, hey, I have this great thing, look at it.

They're going to want to see that you do have a sustainable supply chain, that you can get the goods in a timely manner. They're going to want to see that you can deliver and that you have customers who are also interested in this as well.

Nick: 00:11:51

I've heard so many stories of like, you know, Walmart or Costco. They are, they could put Companies out of business because they're buying in such large quantities.

I don't even know if that's a thing in the past, maybe that's an old wives tale, I don't know.

But where you know, someone is ramp, ramps up their production, they make all this product and then Walmart or you know, one of these large big box retailers says no, I don't need it anymore. It could be crushing to some of these brands.

Emily: 00:12:16

Absolutely.

And I think that's a, it's a really good age old question of well whose responsibility is it to sell this if it's on the shelves at Costco and no one's buying it? Is is there responsibility on Costco to then make that that company hold? Did they maybe overshoot on their estimates? Did they not?

And that's why for brands launching into these big box stores immediately out of the gate doesn't make sense.

And I was with one of our other corporate partners here actually just yesterday and they said look, if you've never sold into big box retail, you don't want to sell to us, you don't want to start here.

You really need to know what you' you really need to have the unit economics and know that if we have to discount this to get it off the shelves that you can support that, that you're not going to take a loss. Especially with big box stores like Costco that is a volume play. So they are always going to come in with large pos especially on seasonal things.

That's what really makes me nervous.

Around Christmas time they'll do these one off promos and some companies feel like they've won the lottery that I have this $900,000 PO and I'm going to make $1.5 million doing this.

But they don't realize you're on the holidays, there's going to be, you're going to be required to participate in circulars, offer coupons, things are going to be discounted.

And so it helps to start small and scale, you know and it is, it's challenging when you have these founders who really want to deliver on things and get so excited. But sometimes you have to take a step back and think can I support this if things go wrong?

Do I have is this is my whole business predicated on this one purchase order and it's never a good position.

Nick: 00:13:54

To be in as a, as a business owner myself there's always, you know, what is the right investment to make and does this make sense? And sometimes you might get an opportunity where it's like, can you handle that opportunity? Is it worth the risk to do that?

Or is it going to put you in a position potentially, like if you had a, you know, holiday promo, you know, is it going to put you in a position that could, you know, potentially be very negative for your company if it doesn't go right? And what's that risk versus reward balance that you have for you?

So when someone works with you, is it really, you know, you're looking to get most your engagements? Is it people looking for dollars to be able to fulfill POS until they get large enough where they could sustain on their own?

Emily: 00:14:35

That's, you know, that's a really good question. So the financing that a company has today might not always be the financing that keeps them going.

So you might need purchase order financing for 6 to 12 months and then you're able to grow into an accounts receivable facility or an ABL facility or you may be underbanked. I had a company that came to us that had a $500,000 revolver with their bank and they were very excited to get this loan.

It sometimes feels like getting that bank line of credit is what you've always been looking for. That's validation of your business. The bank will give me money.

But when you start to look at the financials, they came to us needing purchase order financing because they were capped out at what the bank was giving them. They were only able to access 500,000, but you look at the financials, they were able to qualify for $3 million worth of an asset backed facility.

So it's called an abl. It's where you leverage your AR and your inventory.

So sometimes borrowers might think they need one thing, but another loan product actually makes more sense for them. You can always couple purchase order financing with an ABL if you want to, or find a solution that gets you maybe a larger revolver.

Because for whatever reason that bank is being conservative that day. And if I get started on banks, I don't know if I'll ever stop. It's challenging to make both parties happy.

Banks have their own expectations of the risk tolerance that they're willing to take. Quite frankly, banks make more money on their treasury management and every time you swipe one of their credit cards than they ever will on loans.

So there's a misalignment in what they want to make on their yield versus the credit risk that borrowers want banks to take on.

Nick: 00:16:09

Interesting. On the topic of like a good debt versus bad debt.

I remember in college when I was going through school I had my accounting, an accounting professor, he said, student loans, you know, if you, if you take, if you get student loans, pay them out. Don't, don't pay them early. Let them go as long as possible.

Because let's say your student loan is 10,000 or 20, whatever, let's just say it's 10,000. $10,000 today is going to be worth much less in 20, 20 years from now. It may be worth, I don't know, five thousand or a thousand.

It's going to be significantly less. So he's like, just let it pay, let it play out for as long as possible.

And I've kind of taken that mentality is if, if I can get into a good rate and just pay something off over long periods of time, I feel like that as, as opposed to giving up cash up front. But what, what would you say is, you mentioned at the beginning of the podcast, there's good debt and bad debt.

What would be an example of good debt versus bad debt?

Emily: 00:17:04

Any type of debt that you rush into. So, and I say this all the time and it probably drives my team crazy. There is good, there's cheap and there's fast.

And you're never going to get all three. So the best time to look for a loan is when you don't need it.

Because if you are being reactive in the market, you are in a crunch to fulfill this purchase order. You're in a crunch to make payroll. That's when your back is up against a wall.

And the lenders that are going to give you cash fast are not the lenders that you want to work with because they can charge you for it.

There's a give and take, Yes, I can give you this cash in seven to 14 days, but I'm going to charge you 35 to 40% APR for it because you don't have any other options. And I know this interesting.

Nick: 00:17:47

I, I had a, when we first started, I started my business 10 years ago and we had a consultant that said, why don't you go get a line of credit set up. This was after like a year or so of business. And he goes, just go set it up. You know, make it a few hundred thousand bucks.

You don't have to touch it, but it's there if you ever need it. If you have, if in the future you have issues with payroll or whatever it is, it's there. And sure enough, it's, we still have it.

To this day, we've never touched it, but it's there, available in case that that day ever came where we needed to have it.

Emily: 00:18:17

That's exactly right. And that sounds like a really great loan. Some lenders ingest things to look out for.

And it's so interesting, especially when you come to that founder mentality is I could not start a sugar cookie company, I wouldn't know where to begin.

But to that point, that founder also doesn't know where to begin when it comes to loan options that make sense or even then, what to expect with those loans. So things to look out for, even to your point that some loans, they're not all use it or lose it. Some loans will require minimum utilization.

The lender will want to see some type of minimal balance outstanding so that they can make their yield.

And so those are just things also as founders to think about is am I going to get this and will this lender allow it to just sit, or are they going to have utilization requirements? And those are always things that can be negotiated and discussed. Especially when you get multiple term sheets, you get a little bit more leverage.

Nick: 00:19:08

Definitely.

I'm curious what your take is on right now with, you know, interest rates being, you know, a big topic of conversation over the last couple of years where they've remained high.

You know, there's been talks of lowering, especially this year, but it seems like, well, up until this point, there has been no reduction in interest rates. How does that affect your business?

Emily: 00:19:29

It affects the way that our borrowers look at loans and consider pricing. Something to always look at is a prime floor. So a lender might say, I need to have a prime floor of 8% and if your rates go lower.

We saw this a lot during COVID No one ever thought that rates would go as low as they did. And so not a lot of lenders locked in a prime floor. So they were lending at 7% and their cost, you know, then there was no prime floor.

Then they start, you know, the rate goes down to 3.25 and they just, they're not making the yield that they anticipated. So there's a lot of prime floors that have been added to contracts and say, yes, the rates might go down, but it will never go below 8% for you.

I do think we're experiencing a bit of whiplash and borrower expectations. We've seen what rates can be and we want that again. And that's not even in business lending. That's also in mortgage rates, too.

There are people who are just holding out to buy, thinking that they're going to see this moment where mortgage rates are below 3%. And I just don't think we're going to get there. But a lot of business owners are thinking about loans that way too.

Just waiting like a little bit longer to see if rates will go a little bit lower and then that's the time to take it.

But I would never let rate hold, hold or waiting for rates to hold a business back because the opportunity with that cash, and this is a key thing, you need to have something to know that you're going to deploy the cash for, given certain loans. But there's, it's great to have the safety net if you have it.

But if you're saying I can turn $500,000 into $700,000 and you're going to make 200,000 on that transaction, but you're not going to do it because you want to see if rates are going to go down, that's also something you need to think through as is it worth it to save 5,000 if I could make 200,000.

Nick: 00:21:15

With the office that we're, we just, that we're in escrow on, you know, we've had a different mentality is we actually wanted to rush it a little bit because we wanted to be in a higher rate environment because we figured there's less competition. There's pretty much no competition for the buildings that we looked for.

The prices are going to be decreased from where they would be maybe in a year or two, once the rates go up. And at some point, you know, maybe in three. I think with sba you have to wait three years.

We can refinance into potentially a lower rate and get back that initial capital that we, or maybe not all of it, but a portion of the initial capital that we put down as a down payment into the building.

So there's, there's positives and negatives, but I know people get a little freaked out and they wait for that time, especially on when it comes to home buying, if you wait that long, you know your, the cost, the competition is going to increase, the price is going to go way up. Is it worth it to do that when you can just get it now, when there's much less, you know, buyers out there?

Emily: 00:22:11

Absolutely. And as likely as it is that rates go down, it's just as likely that they could go up.

So sometimes it's just what you know, and you calculate that into your pricing, you calculate that into your decision making process and if you do have the opportunity to refi to lower rate, it will always be there. Hopefully that opportunity comes. But my gosh, hopefully it, you know, doesn't go the opposite direction and goes back up.

Nick: 00:22:32

So let's say you were to start a business in the CPG space and you're, you're that, that passionate founder that wants to scale and grow. You want to be in Walmart and Costco and all the other different big box retailers at some point. What would, what would be your path?

I know there's probably a lot of different paths and different nuances to it, but what would be a path that you think that you would choose in order to scale your business? Using debt.

Emily: 00:23:00

Using debt. I would use, I would know that you need to have money to start anything. Unless you're going to start a services based company.

You might go clean office buildings, very low upfront cost. You know that that's much easier to do than something that's going to be capital intensive where you have to bring in inventory.

I tell people this, if there's a loan that you can get for it, use it. Because lenders are not going to give you a loan based on your marketing costs or your payroll costs or sometimes you're remodeling costs.

If you want to, you know, make your office look nicer.

There's leasehold improvements, yes, but no lender's gonna say, oh, you need to pay for marketing, here's $10,000 for marketing and hopefully you turn it around. Typically a loan like that's going to be revenue based, it's going to be very expensive and you really need to know your numbers.

What I would do is I would use loan mechanisms that I can get financing for. So purchase order financing. I would have a lender use their cash at a cost to me to finance my purchase orders.

So whatever cash I do have in the bank I can use to cover my insurance payments I can use to cover my marketing expenses I can use to pay people. I would also absolutely use accounts receivable financing. Big box retailers are going to give you terms.

They're not going to pay you for 30 to 60 days. So I've bought my goods day one, I've delivered them to Walmart 30 days later and Walmart's going to pay me 60 days after that.

That's a 90 day cash conversion cycle. That means I have to have enough cash in my treasure chest to, to maintain all of my costs for 90 days.

But if I can have a purchase order lender buy those goods for me, deliver those goods and then finance that receivable either through some type of supply chain financing or accounts receivable product, then it's also still using someone else's cash to pay me that same day. I invoice bringing your cash conversion cycle down to a couple of weeks as opposed to 90 days.

Nick: 00:24:52

Let's say the business is wildly successful and it continues to grow. At some point, would you cease using debt or would you just use it a larger magnitude as the business grows?

Emily: 00:25:01

I think it depends on the goals of the business. If they want, if they're largely successful and they want to keep growing, you're going to need a little bit more cash to continue that.

Do you want to keep reinvesting profits into the business or do you want to start maybe taking some cash out? If you're good, wildly successful, your status quo, you're maintaining, that's when a bank line makes a ton of sense. That's your treasure chest.

That's your safety net. And you can pull from that if the opportunity arises. Some banks don't get excited at tremendous growth. They want to kind of see that steady eddy.

They want to see what's predictable. They want to be able to look at your loan every three months, say, yep, on track, give you a checkbox and, you know, keep having that availability.

But that's completely up to business owners. Some prefer to make loans to the business themselves and get paid, you know, 9% interest on the loan that they've made.

And that's something that they can do as well and take that, even what they're making from the loan and reinvest it back into the business if they want to.

Nick: 00:25:56

In what you do is there, you know, for these CPG companies, if someone were to borrow to buy, you know, goods upfront or whatever it may be to process pos. Is there a tax benefit to doing it?

Emily: 00:26:12

Tax benefits? It depends. EBITDA wise, you can always add interest back into that calculation.

So you might take a net loss on the year, but you can add interest back into your earnings at the end of the year and still show a profit. You can still be EBITDA positive, which is what lenders will look at.

So there's an, you know, if you can't, again, if it costs you $30,000 interest a year for purchase order financing, that can always go back up to your bottom line at the end of the year.

Nick: 00:26:37

You know, in, I know when it comes to, you know, familiar, like in real estate investing and things like that, we can take bonus depreciation and, you know, now with the new tax law, you can accelerate it. You know, take the bonus depreciation up to 100%. You know, I know for, for us on the office side, it's, it's a reduced amount.

You have to do a cost segregation, all these other things. But can you do that with the type of financing that you offer? Can a business take, you know, accelerated depreciation in year one or no?

Is depreciation not even a thing?

Emily: 00:27:10

Depends on the industry of the business. Obviously when there's hard assets in real estate, depreciation is much more pertinent.

For the most part when it comes to CPG companies, the hard, you know, equipment is one that you can always use. So sometimes they're manufacturing the goods themselves. They can add back in the depreciation on the equipment.

When it comes to AR inventory, that doesn't necessarily depreciate, you know, office fixtures, things like that. Yes, those can, those can roll back up.

Nick: 00:27:34

Gotcha. Okay, that makes sense.

It's so funny in what I do, we're labor intensive so we're not really, you know, we don't buy products, we sell products, but we sell really products for that other people make. So we're really a middleman because I'm a food service broker. But tell me, what do you want to achieve in your career that you've not yet achieved?

Emily: 00:27:56

Oh, that's such a good question. I want to build something that doesn't exist on the market yet. In a loan tool there is so much data out there and lenders just aren't utilizing it.

I think there's data out there on performance delivery, on purchase orders. Lenders are very fixed on the assets. When you deliver, you get an invoice that's fundable.

You know, as long as your customer pays the bill, they're going to give you a loan. But there's a missing need in the market for that pre delivery, pre delivery cash need.

And I want to build something that helps that because right now the stop gap there, like my ultimate goal is to stop the merchant cash advance market.

I have seen so many businesses decimated by these high interest loans and they're forced to take them because a, they've, they're reactive to the market, they need the cash tomorrow and a lender's going to give it to them or they need to buy the goods immediately because they just got a larger purchase order than they're not used to getting. There's data out there now that can be leveraged to open up a credit box that hasn't yet existed in the market.

Nick: 00:29:08

I love that. When are you going to get started?

Emily: 00:29:11

Oh, we're already started.

Nick: 00:29:13

Okay, good. For those that want to reach out to you, connect with you, learn more about what you do and bridge, what's the best way to get a hold of you Email?

Emily: 00:29:24

My email is E Reeves R E E V as in Victoria e s e reevesridgemarketplace.com okay, fantastic.

Nick: 00:29:33

Well, Emily, I want to say thank you so much for coming on and, and sharing. I. It's so cool. I always learned so much in these, you know, podcast episodes, and I definitely did here today. So thank you.

Emily: 00:29:44

No, this is great. Thank you so much for having me.

Nick: 00:29:46

Of course.