A Lender to Consumer Start-Ups Falters, Rattling Its Clients

A popular lender backed by venture capital firms is struggling financially, sending shock waves through the small clothing and home furnishing companies that count on its financing.

The lender, Ampla, spent years courting small direct-to-consumer brands with low rates and a pitch that it understood their needs. In recent weeks, its top executives have been searching for a buyer, two people familiar with the firm’s finances said. Last week, Ampla, which is based in New York, said it would lay off half its 62 workers.

Ampla has also tightened or frozen clients’ lines of credit and told many customers to find other lenders, leaving them in the lurch, according to half a dozen former and current clients. The lender has served online businesses that emerged in the past decade to sell wares like silk knit sweaters, gluten-free cookies and 3-D printers for toys often directly to online shoppers, relying heavily on social media sites for marketing and buzz.

Its troubles appear to be part of a broader reckoning for direct-to-consumer businesses, some of which are no longer growing as rapidly as they once were or are struggling financially. Investors that were eager to back such firms are now being much more cautious.

Ampla, which was founded in 2019, has whittled the number of its borrowers down to around 100 to 150, one of the people familiar with its finances said. Some of those clients say they haven’t found anyone willing to lend to them at rates as low as Ampla’s. Many investors and banks became more wary of working with smaller and relatively untested businesses over the last two years as the Federal Reserve raised interest rates.

Ampla has been under pressure from its own lenders, including one that has stepped in to examine Ampla’s loan book after the firm breached a condition of its borrowing, the two people said.