How modern financing built a vintage cosmetics brand

Lipstick from the 1930s. Brightening violet powder. Cherry sweetheart glaze. Products made by Besame Cosmetics usher in feelings of classic femininity, elegance, and nostalgia for eras past — but their rise as a small beauty business is nothing if not a modern success story.

At age 12, Gabriela Hernandez immigrated to the U.S. from Buenos Aires, bringing her admiration for her grandmother’s sophisticated beauty routine with her — and so, a life-long love affair with vintage beauty began. After working as an artist and designer on the agency scene for years, Gabriela and her husband Fergus decided in 2004 that it was time to take the plunge and create a brand that honored the style, spirit, and sensibility of female beauty.

“Our biggest driving forces as entrepreneurs are the freedom and flexibility to be there for our kids. It’s just all about how you choose to prioritize your time. Vendors and customers know they won’t be able to reach us after 3 pm.”

After years of studying cosmetic history, Gabriela and Fergus’ ideas for natural, classic, and reliable makeup formulas — reminiscent of the 1920s, ‘30s, ‘40s, and ‘50s — were ready to go to market and attract today’s modern woman. “We had a graphic design business, but we were increasingly drawn to our love for these vintage makeup formulas. It all started with a miniature WWII recreation of a small bullet lipstick… and thanks to the internet, we were propelled into a real business faster than we could have imagined.”

Another factor driving them forward? Their daughter and the realization that one day, she may put cosmetics containing unknown chemicals on her face. “Everything we make, our daughter has to be able to wear. She wants to wear whatever mom wears, so our commitment to safe products is a huge part of our philosophy.” Unlike the world’s biggest beauty brands, Gabriela and Fergus decided to manufacture and design all of their products in the U.S. using only the finest natural and safe ingredients that surpass strict European performance standards: nontoxic, responsible luxury.

This new brand of responsible luxury came with many years of bootstrapped financial responsibility. Gabriela and Fergus were able to secure a traditional SBA loan to get started and they quit their full-time jobs to focus on Besame. To ramp up inventory, they got a home equity line — but then the bubble burst, and they had to short-sell their home. Besame limited their financing to small credit cards and Gabriela and Fergus did extra consulting work on the side to rebuild their credit and get back in the (cherry noir) red.

“Big cosmetic companies are slow-moving machines that are all about ‘buy, buy, buy.’ As a small business, we can be faster and more creative, and focus on engaging customers with our story.”

Fast-forward a few years, and Besame Cosmetics had become a “hyper-niche” cult hit with a devoted customer base — despite competing against three big global beauty conglomerates that dominate 95 percent of the market. “It was a blessing that we evolved the way we did,” Fergus explained. “We lived in a space that they didn’t want to be in. It’s been a creative challenge to find resources to compete at that level.” Originally limited to word-of-mouth and social media marketing and selling through independent stores, Gabriela and Fergus opened their first store in Burbank and experienced a new level of growth.

Their adventurous, early adopters and strongest customer advocates helped Besame get noticed in the big leagues: in 2014, they got their first order from Sephora.

In the beauty business, a contract with a major online retailer like Sephora is the definition of opportunity knocking — and Gabriela and Fergus immediately looked for a loan to help them produce enough inventory to meet the deadline for the order. They tried their luck with traditional banks, but those avenues quickly snapped shut like one of their vintage powder cases.

“When you consistently reinvest your revenue to grow your business, the numbers on paper never look as good. Banks didn’t understand our cash flow or needs as a small business.” Fergus and Gabriela yearned for better transparency from their lenders. “If something was wrong with our application, we wanted to know so we could fix it. But we couldn’t get any answers.”

Ultimately, they found their perfect shade of lending the same way many of their original customers found Besame: on Facebook. “When opportunity knocks, you have to seize the moment. When we learned about Funding Circle on Facebook, we thought, ‘Hey, let’s try it!’ Their approach is so different than a traditional bank’s — and that’s what attracted me,” Fergus said.

“My account manager was great and very easy to reach on the phone. Compared to our months-long experience with banks and the SBA, Funding Circle’s process was amazing.”

Fergus and Gabriela got approved for $100,000 within five days — just in time to fulfill Sephora’s order and launch three new products in stores nationwide. “I can laugh about it now, but I kid you not: our funding literally came within a week of us absolutely needing to pay vendors. Funding Circle’s timing was immaculate.”

For a fast-moving consumer goods business like Besame, Fergus and Gabriela needed a simple, fast approval process and the ability to pay the loan back early to save precious funds on interest. “We were very happy with our loan terms. They fit our needs! We knew we had big orders coming in, so we love that we didn’t have to pay a penalty for early repayment. A different lender we considered performs daily debits — they wanted to take our money every single day and hold us liable for interest through the entire term!”

For Gabriela and Fergus, one business loan proved to be the bridge to a whole new level of growth and national brand awareness. Over the last year, they launched nine new products and opened a second store location. Today, they hold the record for the highest-rated lipstick on Sephora.com! That kind of small business success story is always in fashion.

“When we got our Funding Circle loan, we were ecstatic. It was a huge victory, because we knew it was an immediate bridge to a huge opportunity. It was a blessing. There’s no other way to say it.”

Ready to expand your business like Besame Cosmetics? Discover 3 reasons why you should fund a new product launch with a term loan.

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