This startup got a dream order from Walmart. Fulfilling it almost turned into a nightmare.

Dakota Sheets’s big break for DogSauce, a pourable food topper for dogs made with sweet potato and bone broth, came in 2024, when the DTC brand he founded a few years earlier landed a distribution deal with Walmart to go into about 1,400 stores.

“It was phenomenal for me,” Sheets told Retail Brew. “It’s the first time I’m looking at significant cash flow and not just focused on cost per acquisition online and starting to focus on really what this could look like from a retail front.”

But it was production on an unprecedented scale for the small bootstrapped brand, and he didn’t have the cash on hand to fund it.

“I needed money, and I used my house,” Sheets, who used a home equity line of credit to fund production for the Walmart distribution, said.

Even better news came early this year, when Sheets learned that DogSauce’s footprint at Walmart would more than double, with the retailer planning to expand distribution to 3,750 stores. Having already tapped his home equity for the first rollout, Sheets said the expansion required more capital than he could provide personally.

This time, his bank said no.

“Banks will give you money if you have two or three years of…a lot of revenue,” Sheets said. “But when you’re a startup like ours…banks won’t look at [us] because we don’t have the historicals.”

Sheets took a loan from an online small-business lender, but the interest started piling up long before he shipped to Walmart, never mind getting paid from the retailer.

“I was quickly seeing that we were paying atrocious amounts of interest every week, and we’re still waiting for packaging to get here,” Sheets said, adding that his interest rate reached 36%.

What had seemed like a dream for the brand was starting to look like a nightmare. Then, through Walmart, he learned about Bridge.

Looking forward: Bridge is a three-year-old financial platform that reports it has provided more than $800 million in financing. Typically banks decide whether to loan businesses money based on looking in the rearview mirror, scrutinizing last year’s profits as well as inventory and other assets. But Bridge, which calls its loans “production financing,” operates in a category often called “purchase order financing,” and provides loans based more on what it sees through the windshield, which in the retail realm often means purchase orders from retailers.

“Fundamentally, the biggest issue is what we’re doing is forward-looking,” Harte Thompson, who co-founded Bridge with Rohit Mathur, told Retail Brew. With traditional banks, “it’s all backward-looking credit programs, and I don’t mean that in a bad way,” Thompson said.

Along with making loans that many banks wouldn’t, Bridge doesn’t require repayment of loans until after recipients have been paid for orders.

Bridge has a partnership with Walmart, and Thompson said rather than receiving a financial incentive, Walmart wants to distinguish itself by having up-and-coming brands on its shelves. And it’s making sure those brands can fulfill big orders.

Walmart wants “to make sure that brand feels like they can actually scale,” Thompson said. “And obviously, Walmart’s competing with Target and Costco and many other retailers for that brand’s time and attention.”

Thompson acknowledges that the interest on Bridge’s interest rates are higher than bank rates, although the difference is “not as astronomical as you may think.” Still, he said the loans can make more sense for higher-margin categories like beauty and apparel than those that can have slimmer margins, like beverages.

“Once you get down into the lower double digits, like the closer to 10% or even single digits for sure, that’s when I would candidly tell the business owner, ‘Hey, we could do this, but I wouldn’t say it’s what’s best for you,’” he said.

For businesses that are a fit, Bridge has good news. A new partnership with LuminArx Capital Management will provide up to $500 million in financing specifically for brands fulfilling orders for retailers.

Balance Sheets: When DogSauce founder Sheets got the news of the Walmart expansion, one option would have been to take on investors, but he didn’t want to.

“It’s the biggest moment as an entrepreneur where you don’t want to give up equity,” Sheets said. “You’ve been able to get to this, and it’s time to see it through…You have to push all your chips in.”

DogSauce was approved for a Bridge loan and received it in mid-May, and with it was able to fund his production costs for his Walmart order and pay off the online small-business loan he’d received before the interest piled up further.

“We will pay [Bridge] back in August and likely be asking for another loan,” Sheets said. “Maybe twice the size.”