$2M Working Capital Loan for a $10M Revenue Business

At $10M in revenue, your business is past the “will any lender talk to me” phase and into the “which lender gives the best deal” phase. A $2M working capital ask is well-supported by your revenue scale, but the right product depends on what you'll use the money for, how fast you need it, and what your balance sheet supports. This page walks the four real options — bank LOC, SBA 7(a), asset-based lending, and revenue-based financing — with real qualification math, cost comparison, and timeline. For the broader product overview see working capital loans.

Is $2M Reasonable on $10M Revenue?

Yes, with caveats. Lenders look at three sizing tests:

• Revenue multiple: $2M / $10M = 20% of annual revenue. Most bank LOCs cap at 10–15% of revenue (so $1M–$1.5M for a $10M business). $2M is achievable at bank LOC but expect underwriting scrutiny on use of funds.
• Debt service coverage: At ~9.75% APR on a $2M term loan, 10-year amortization, monthly payment is ~$26,200/month = $314K/year. With 1.25x DSCR requirement, you need ~$393K of free cash flow after owner compensation. A $10M business with 6%+ net margin clears this; 4%-margin businesses (distribution, low-margin retail) may need closer to 1.40x DSCR equity-cushion.
• Working capital cycle: Lenders ask “why do you need $2M of working capital?” The good answers tie to operating cycle: 60-day AR + 45-day inventory turn = working capital tied up for ~105 days. On $10M revenue, that's $2.9M of working capital naturally consumed. A $2M LOC for this purpose is supportable. The bad answer is “general working capital” with no specific use — lenders read that as cash flow distress.

Option 1: Bank Line of Credit ($2M)

For a $10M business with strong financials, a bank LOC is the cheapest source of revolving working capital. 2026 pricing:

• Rate: Prime + 0.5–4.5% → 8–12% APR variable. Strong borrowers (720+ FICO, 3+ years, clean financials) get prime + 0.5–2% (8–9.5%). Average borrowers get prime + 2.5–4% (10–11.5%).
• Structure: Revolving LOC with annual renewal, often with a 30-day “clean-up” period (LOC must be at zero for 30 days each year). Interest-only during draw period; principal due at renewal or replaced with term loan.
• Limit: 10–15% of revenue is typical; $2M on $10M revenue is achievable at relationship banks but stretches non-relationship banks. Often easier to get $1.5M LOC + $500K term loan than $2M pure LOC.
• Collateral: Usually secured by a UCC blanket lien on AR + inventory + equipment. Sometimes real estate. Bank may also require personal guarantee from 20%+ owners.
• Fees: Origination 0.5–1.0% ($10K–$20K), annual renewal fee $1,500–$3,000, non-utilization fee 0.25–0.50% on undrawn balance (some banks).
• Timeline: 30–60 days from application to first draw, faster at existing deposit bank.
• Best for: Established businesses with seasonal or cyclical working capital needs, where the LOC is drawn and repaid multiple times per year. See working capital qualification.

Option 2: SBA 7(a) Working Capital Term Loan ($2M)

SBA 7(a) is best when you want a fixed amortization schedule (not revolving) and qualifying for bank LOC is borderline:

• Rate: Prime + 2.25% (capped for $350K+, 7+ year term) = ~9.75% APR variable in May 2026. Premier SBA Preferred Lenders (PLPs) sometimes price below cap for strong $2M borrowers (~9.50%).
• Structure: 10-year amortization for working capital (SBA max term for non-real-estate). Fully amortizing, no balloon.
• Fees: SBA guaranty fee 3.5% on the $1.5M guaranteed portion (75% of $2M) = $52,500, rolled into loan. Lender packaging $3K–$7K.
• Monthly payment: ~$26,200/month at 9.75% over 10 years.
• Personal guarantee: Required from all 20%+ owners.
• Timeline: 60–90 days with a PLP lender; longer without.
• Best for: Working capital needs you want to amortize over 10 years — expansion capital, large hiring rounds, technology investments, debt consolidation. SBA can refinance existing higher-rate debt as part of the $2M.
• Not great for: Pure cyclical working capital (seasonal inventory builds). Revolving LOC is better for that — you pay interest on what you use, not on a fully drawn term loan.

See SBA loan rates 2026 for the broader SBA pricing breakdown.

Option 3: Asset-Based Lending (ABL) ($2M)

ABL is the right product when your balance sheet is asset-heavy — AR-heavy, inventory-heavy, or both. The line is sized to a borrowing base, not to general revenue.

• Rate: SOFR + 250–450 bps = 7.9–9.9% all-in in May 2026 (SOFR ~5.40%). Best pricing for $5M+ ABL facilities; $2M is on the smaller end of ABL appetite.
• Borrowing base: Typically 80–85% of eligible AR (under 90 days, U.S., creditworthy) + 50–65% of eligible inventory (finished goods, sometimes raw materials). On $10M revenue with 60-day AR = ~$1.6M of AR; at 80% advance rate = $1.3M available from AR. Add inventory to reach $2M.
• Structure: Revolving facility. Daily or monthly borrowing base certificate reporting. ABL has more covenants and monitoring than bank LOC — expect monthly reporting, AR aging certifications, sometimes inventory audits.
• Fees: Origination 0.75–1.5%, unused line fee 0.25–0.50%, annual collateral exam $7,500–$15,000, monthly reporting overhead.
• Timeline: 30–45 days with a clean balance sheet.
• Best for: Distributors, manufacturers, importers, staffing agencies — businesses with significant AR or inventory. The borrowing base grows with the business (more revenue = more AR = more capacity).
• ABL providers: Wells Fargo Capital Finance, JPMorgan ABL, PNC Business Credit, regional banks with ABL groups, specialty ABL lenders (Crestmark, Siena Lending, eCapital).

See invoice factoring vs working capital for the AR-focused alternative.

Option 4: Revenue-Based Financing (RBF) ($2M)

RBF is the fastest source but the most expensive on an APR basis. Use cases: time-sensitive opportunity (acquisition, ad spend ramp, inventory for known demand), bank LOC application stuck, or you don't want to dilute equity.

• Factor rate: 1.10–1.20x for a $10M-revenue business with clean financials. Effective APR depends on payback speed — typically 15–30%.
• Structure: $2M lump sum advance, repaid as 4–10% revenue share until total payback (e.g., $2.3M on $2M at 1.15x) is reached. Typically 12–24 months.
• Top providers: Capchase (SaaS), Pipe (recurring revenue marketplace), Clearco (e-commerce), Founderpath (B2B SaaS), Decathlon Capital (generalist), Lighter Capital.
• Timeline: 7–14 days from application to funding.
• Personal guarantee: Sometimes required, especially at $2M. Negotiable for stronger borrowers.
• Best for: Speed-driven needs, vertical-specific use cases (SaaS for SaaS RBF; e-commerce for Clearco; etc.), or as bridge while you wait for SBA/bank approval.
• Watch out for: Stacking advances (taking second RBF on top), which collapses cash flow to debt service. Most providers prohibit it; some don't check until you default.

See RBF rates 2026.

Cost Comparison: $2M Over 24 Months Used

Apples-to-apples: assume you draw $2M and carry it for 24 months (then repay or refinance). Approximate total interest cost:

• Bank LOC at 10% APR: 24 months interest on $2M = ~$400K. Add ~$15K origination + ~$3K renewal. Total cost ~$418K.
• SBA 7(a) at 9.75% APR, 10-year amortization: 24 months interest = ~$360K. Add $52,500 SBA guaranty fee + $5K packaging. Total 24-month cost ~$418K. Loan amortizes principal so balance after 24 months is ~$1.65M.
• ABL at 9% all-in APR: 24 months interest = ~$360K. Add ~$15K origination + ~$30K in annual fees + monitoring overhead. Total ~$405K + reporting overhead.
• RBF at 1.15x factor over 18 months: Total cost $300K (the $0.3M premium). Effective APR ~20%. Repaid 100% by month 18.

RBF appears cheapest in 24 months but only because the principal is repaid faster — you pay $2.3M total in 18 months vs $2M + $360K interest over 24 months for SBA/ABL. Compare on dollars-paid, not just APR. How to compare loan offers.

Decision Framework

• Cyclical working capital, established business, strong credit: Bank LOC. Cheapest, most flexible.
• Long-term capital project (expansion, hiring, technology): SBA 7(a) term loan. Amortizes over 10 years, predictable payment.
• AR-heavy or inventory-heavy balance sheet: ABL. Borrowing base grows with the business, no personal guarantee in many cases.
• Time-sensitive (need money in 14 days), or bank/SBA declined: RBF. Pay the premium for speed.
• Refinancing existing higher-rate debt as part of the $2M: SBA 7(a) consolidation is excellent — lock in 9.75% over 10 years to replace 15–25% online debt.
• Multiple uses (some cyclical, some expansion): Stacked structure — $1.2M bank LOC for cyclical + $800K SBA term for expansion. Two products, lower total cost than $2M of either alone.

Get Matched for $2M Working Capital

The fastest way to find the right $2M structure is to apply through a marketplace that submits to bank, SBA, ABL, and RBF lenders in parallel. Get matched for working capital — one application, multiple offers. Also see how much you can qualify for, what lenders look for, and working capital mistakes that delay funding.