Digital Brands Group secures $238,050 loan from 1800 Diagonal Lending
What's the deal? Digital Brands GroupDealroom has a profile for this one. Try Dealroom → (DBGI), a Nasdaq-listed company, has secured a $238,050 loan from 1800 Diagonal LendingDealroom has a profile for this one. Try Dealroom →, LLC through a Securities Purchase Agreement dated June 9, 2026. The deal includes an original issue discount of $13,050, meaning DBGI received $207,000 in net proceeds. The funds will go towards general working capital.
The agreement also opens the door to up to $1M in additional tranches over the next 12 months. DBGI must repay the initial loan in nine monthly instalments of $29,624, starting July 15, 2026, with the note maturing on March 15, 2027. A one-time interest charge of 12% ($28,566) applies.
Why now? DBGI appears to need near-term liquidity for operations. The company, headquartered in Round Rock, Texas, is tapping what amounts to post-IPO debt financing — a signal that it may have limited options for raising capital through more conventional channels.
What could go wrong? The default provisions are punishing. If DBGI fails to make payments, the full balance becomes immediately due at 150% of outstanding principal and accrued interest, plus a 22% annual default interest rate.
More critically, a default gives 1800 Diagonal the right to convert the debt into DBGI common stock at just 61% of the lowest closing bid price over the prior ten trading days. That steep discount could hammer the share price and massively dilute existing shareholders.
Even without a default, the terms allow for considerable new share issuance — capped at roughly 20% of outstanding common stock as of June 9, 2026. If DBGI draws on additional tranches, its leverage and dilution risk climb further.
The signal: Despite being Nasdaq-listed, Dealroom still classifies Digital Brands Group as "early stage," underscoring the gap between its public-market status and its operational maturity. The lender, 1800 Diagonal Lending, is a corporate lender that specialises in exactly this kind of high-penalty, conversion-eligible facility for micro-cap companies — a financing niche that tends to expand when more conventional capital sources dry up for smaller listed firms.
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