The $40M Lesson: What CPG Founders Need to Know About Secured Debt Before You Sign
What Jeff Church learned when $40M in secured debt came due at Suja — and why revenue growth alone can never save you from a debt maturity crisis.
It was 5:00 p.m. on July 3, 2018.
House full of family. Kids running around, everyone getting ready for the Fourth of July. I stepped out to take a call. Scott Uzzell, President of Coca-Cola's VEB group, was on the other end. He told me Coke had decided not to acquire the remaining stake in Suja Juice.
I hung up. Walked downstairs. And I wept in front of my sons.
Here's what was happening behind the scenes that nobody outside the company knew: we had $40 million in secured debt coming due in October. Ninety days away. We were burning more than $10 million per year. Some weeks we had less than $100,000 in the bank. And our gross margins were sitting under 32%.
On paper, Suja was a rocket ship. Fastest-growing CPG brand in America. Compound annual growth rate of roughly 200% in our early years. National distribution. A Coca-Cola minority stake. Covers on every trade publication that covered the industry.
And we were ninety days from a debt crisis that could have ended everything.
I share this story not to dramatize it, but because I've watched too many CPG founders sign debt instruments without fully understanding what they've actually agreed to. Equity investors can be patient. Lenders cannot. And when debt comes due, it comes due.
Growth and survival are not the same thing.
I needed to learn this lesson the hard way. We were growing. We were winning at retail. We had name recognition most brands spend a decade building. But all of that was irrelevant to the bank holding our note. They weren't interested in our velocity numbers or our ACV gains. They had a maturity date. And a maturity date is exactly what it says it is.
"Hope is not a strategy" is something I say a lot. But I'll tell you where that phrase really lands with weight: when you're sitting across from a lender with a note coming due and your only answer to "how are you paying this back?" is "we're working on it."
CPG founders have a complicated relationship with debt. On one hand, equity dilution is real and painful... a poorly structured round can cost you five to ten points you'll never get back. On the other hand, debt is not free money. It's rented capital with a lease that doesn't renew automatically.
The mistake most founders make isn't taking on debt. It's taking on the wrong kind of debt, at the wrong stage, against the wrong assets.
Three types of debt show up in CPG. They're not all the same.
The first is asset-backed borrowing — lines of credit secured by inventory, equipment, or accounts receivable. This is the cleanest kind of debt in CPG. The collateral is real, the lenders understand the asset class, and the line breathes with your business cycle. If you've got $3M in inventory and $2M in receivables, you can probably access $2-3M in a revolving facility without giving up a single point of equity. This belongs in your capital stack, especially at Stage 3 when receivables are predictable and growing.
The second is equipment or manufacturing debt — term loans secured against specific capital equipment. This is how Suja funded a meaningful chunk of its manufacturing buildout. We put roughly $60 million into manufacturing equipment and facilities across the company's first seven years. Not all of that was debt, but a significant portion was. When you're borrowing against a piece of equipment you own and that equipment is generating revenue, the math usually works. The asset pays off the loan. That's how debt is supposed to work.
The third — and the most dangerous for early CPG brands — is growth capital debt: venture debt, revenue-based loans, or unsecured term notes used to fund operations, marketing, or working capital gaps. This is where founders get into trouble. When you're borrowing against future growth rather than current assets, you've created a problem that only accelerates when growth stalls or a strategic partner changes direction.
Our $40 million situation at Suja was complicated because it sat across the second and third categories. Some of it was against real assets. Some of it was effectively funding operations we hadn't yet made profitable. The distinction matters enormously when the note comes due.
The questions most founders forget to ask before signing.
I've led 44 fundraising rounds across eight companies over thirty-plus years. I've signed more term sheets than I care to remember. And here's what I've learned about debt instruments specifically: founders ask the wrong questions.
They negotiate the interest rate. They push on origination fees. They argue about personal guarantees (and you should argue hard about those — I've written about that separately). But they don't spend nearly enough time on the four things that will actually determine whether this instrument helps you or hurts you.
What's the maturity date, and what are the extension conditions? This is the question. Not the interest rate. The maturity date. Because when that date comes, you need to be in a position to refinance, pay down, or extend. If you can't do any of those three things, you're in a crisis. Model out your business eighteen to twenty-four months from the maturity date and ask yourself honestly: at that point, will you have the cash flow, the assets, or the equity position to meet this obligation? If the honest answer is "not sure," you should be signing a shorter-term facility or negotiating extension triggers before you close.
What are the covenants? Financial covenants are promises you make to a lender about how you'll run the business. Common ones: minimum liquidity thresholds, maximum leverage ratios, restrictions on additional debt, requirements to hit specific revenue milestones. Violate a covenant and you can trigger a default even if you're current on payments. I've seen brands get caught in covenant defaults not because they ran out of cash, but because their gross margins came in below the threshold buried in Section 7.2 of the credit agreement. Read every covenant. Model every covenant. If you're a growth-stage business, negotiate financial covenants with real room for variance.
What happens in a default? Understand exactly what remedies the lender has if you breach. Acceleration (the full balance comes due immediately), asset seizure, operational control triggers — these vary significantly by instrument and lender. Know the mechanism before you're in it, not after.
What's the lender's history with CPG? Banks and specialty lenders that work extensively with consumer brands understand the seasonal cash cycles, the retailer payment terms, the working capital gaps. Generalist lenders that wandered into CPG because the category looked exciting often lack the patience and expertise to work through a temporary setback. Your lender relationship is a partnership. Make sure they've done this before.
What saved us, and what it cost.
After the July 3rd call, we moved fast. Within weeks, Coca-Cola and Goldman Sachs provided an $11 million bridge to stabilize the balance sheet while we rebuilt the business. We cut marketing spend in half. We got surgical about the SKUs that actually made money. We shifted our product mix away from the low-margin kombucha and toward the wellness shots we'd launched 18 months earlier — shots that carried roughly 60% gross margin compared to 12% on the outsourced kombucha.
And here's the thing: revenue still grew 10% in 2019 even after cutting marketing in half. Because we stopped prioritizing the products that looked impressive and started prioritizing the products that actually made money.
We swung from losing $10 million on an EBITDA basis in 2018 to generating positive $3 million in 2019. That's a $13 million EBITDA swing in twelve months. And we did it by getting honest about our economics, not by spending our way out.
Fifteen management presentations to potential buyers. None made an offer at first. We kept going anyway.
In 2020, Suja sold to Paine Schwartz for approximately $300 million. The company today generates over $350 million in revenue. In May of 2026, Suja Life went public on Nasdaq at a valuation north of $700 million.
None of that happens if the $40 million comes due and we're not ready for it.
The framework I use now.
When evaluating any debt instrument for a CPG brand, I run through a simple test:
Is this debt secured against a specific asset that will generate enough cash flow to retire the loan? Manufacturing equipment, real estate, receivables — these are assets that create a clear payoff path. This kind of debt can belong in your capital stack.
Is this debt funding operations that don't yet generate positive cash flow? If yes, you need to understand that you're essentially making a bet that growth will outrun the clock. Growth companies make this bet all the time. But you should make it consciously, with a clear-eyed view of your runway, your margin trajectory, and your refinancing options at maturity.
Is this debt the only thing standing between you and operational shutdown? If you're already at that point, you're borrowing from a position of weakness. And I have never successfully sold or financed a company from a position of weakness.
The rule: gross margin above 40% by end of year two, heading toward 50% by year three to four. If your margins are below 35% and you're adding secured debt against future growth, you're stacking two problems on top of each other. Get the margin right first. Then debt becomes a tool rather than a trap.
Eighteen months of runway. That's the minimum I want to see before a CPG founder takes on significant secured debt. Because the Rule of Twos applies here too: things take twice as long and cost twice as much as you planned. If your debt maturity is twelve months out and your turnaround plan requires eighteen months to execute... you have a problem.
The honest truth about debt in CPG.
Debt is not bad. Some of the most intelligent capital structures I've seen in this industry use debt intelligently alongside equity to minimize dilution and fund real assets. A $2 million equipment loan that lets you bring manufacturing in-house and improve gross margins by 8 points? That's a great trade. A $5 million venture note used to fund a marketing campaign that may or may not work? That one keeps me up at night.
The difference is what you're betting on. Assets and cash flows are predictable. Marketing results aren't. Retailer velocity trends aren't. Strategic buyer interest isn't. If your ability to repay debt depends on something that isn't in your direct control, you've transferred risk to a lender that doesn't actually understand CPG, and you'll discover that on the maturity date.
CPG is a "Penny Profit" business. The pennies matter. And no line of that is truer than when you're calculating whether your cash flow can cover a debt service payment while also keeping the lights on, the product on shelf, and your team paid.
Gross margin determines destiny. In CPG, that's the foundational truth. But destiny still has a due date.
Ready to get clear on the right capital stack for your brand? The CPG Founders Group MBA for CPG program walks through every instrument — equity, debt, and hybrid — with real benchmarks from brands that have actually done it. And if you're ninety days from a capital event or trying to get ahead of one, the 90-Day Breakthrough is the fastest path to a fundable, scalable business.
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