Navigating Change: Lilac Learning Center Finds Stability and Growth with Craft3

When Jeffrey Kalles founded Lilac Learning Center in 2016, his vision was clear: to support children who do not thrive in traditional learning environments. However, the journey from vision to sustainable business was anything but linear. Over the years, Kalles and his team navigated shifting service models, financial hurdles, and industry-wide disruptions—all while maintaining their commitment to the children and families they serve. With the help of three Craft3 loans over five years, Lilac Learning Center not only adapted but thrived.

It began as a traditional medical practice, offering behavioral health services to children with high developmental needs. Although Kalles was doing the work he always dreamed of, he soon learned that the Medicaid reimbursement model wasn’t sustainable. Billing delays meant months waiting for payments while fronting staffing and operations costs.

“Lilac was dying. It was headed for bankruptcy,” Kalles recalls.  

To stay afloat, Kalles turned to quick, high-cost loans that only deepened the financial burden. Then he found out about Craft3. Unlike traditional lenders who only saw risk, Craft3 recognized the essential service Lilac provided to vulnerable children.

“When I meet a borrower, I’m not just investing in a company or a balance sheet. I’m investing in a person who wants to change their community and make it better,” Megan Hulsey, Business Lender VP, says. “Jeffrey is in this business for the right reasons.”  

By partnering with Craft3, Lilac Learning Center received a Small Business Administration (SBA) loan that helped them get out of predatory debt and stabilize the company.

Shortly after however, the pandemic hit, causing Lilac to operate at a loss due to reduced school attendance. Knowing Lilac Learning Center’s story and its commitment to helping students, Craft3 was able to provide a bridge loan against their Employee Tax Credits to help them maintain operations.

It was during this time that Kalles hired a CFO, Tim Gallagan, who helped Lilac reassess their financials and pivot towards a financially sustainable business model. As a result, Lilac started to operate as a year-round, structured learning center for students needing intensive one-on-one support. The choice to provide year-round support helped mitigate learning losses that students were experiencing over summer break.  Moreover, school districts started to contract Lilac to enroll students in their programs, ensuring more financial stability.

As the demand for programs like Lilac Learning Center increased, Kalles and Gallagan knew that the business was ready to continue expanding. In 2024, Craft3 provided its third loan to Lilac to help them build out their Tacoma and Longview locations and serve more students.

“A year ago, we opened Tacoma. The services were so well received that, just a few months ago, we doubled the capacity of the program thanks for the work we’re doing with Craft3,” Gallagan says.

Craft3 is proud to have remained steadfast in serving Lilac Learning Center through challenges, changes, and growth.

“The road is not always easy—not for us and certainly not for the client—but it is very much worth it,” Hulsey says.  

Kalles’ experience is not uncommon. Many early-stage entrepreneurs learn that building a successful business requires continuous adaptation and refinement. For Kalles, the recent business stability has rekindled his passion.

“Seeing Lilac really take off has helped me dream about where we can take it.”

Today, Lilac Learning Center continues to grow, ensuring that more children receive the care they need.

“What is present in the community because of Craft3 is a level of service for humans who have no voice," Kalles reflects. " This group of humans now has access to high-quality care they wouldn’t otherwise receive.”