“If you consider a million dollars in cash just finance, te salud, Don Corleone.”
— Virgil Sollozzo, The Godfather (1972)
If you’re hunting for $2 million to $10 million to fund working capital or growth (we’re not talking real estate or equipment—that’s a different rodeo), you’ve probably realized you’re stuck in business financing’s awkward teenage years. Too big for small business lenders to comfortably handle, too small for big-shot institutional lenders to notice you. Welcome to what we lovingly call the “Dead Zone.”
Don’t panic yet—Diogenes is here to guide you through this annoying financial landscape.
Can’t My Bank Just Fund This? (Probably Not.)
Banks say they fund loans in this range all the time. What they really mean is they love funding these deals if you have perfect credit, shiny collateral, amazing profits, and maybe a famous last name.
In reality:
- Banks usually shy away from this range, especially if you already have some outstanding debt.
- They’re picky about collateral, EBITDA, industry, and your credit history.
- You’ll often need to have $10M+ in revenue and at least $2M EBITDA to get a bank interested.
If your business doesn’t tick these boxes, prepare to politely hear “no.”
What About an SBA Working Capital Loan? (It’s Complicated.)
On paper, the SBA 7(a) loan program can go up to $5 million for working capital, and it comes with good terms. But here’s a reality check:
Collateral Requirements (Especially Above $500K):
- For loans under $500K, you might squeak by on good credit and strong cash flow alone.
- For loans above $500K, lenders must collateralize the loan “to the maximum extent possible” with real estate, equipment, or other hard assets.
- If you’re asset-light (not much tangible collateral), lenders typically approve much smaller amounts based on your cash flow and credit strength—think $500K instead of your desired $2M.
Bottom line: If you’re after a large SBA working capital loan, lack of collateral likely means smaller approvals—not a flat-out rejection, but definitely not the full amount you’re hoping for.
Private Credit: Great if You Have Friends in High Places
Private credit funds fill the gap banks won’t. They offer flexible structures, quick decisions, and fewer collateral headaches—but there’s a catch:
- They rely heavily on personal referrals, professional networks, or private introductions.
- They’re not listed on LendingTree or Yelp. If you don’t know someone, you might struggle to get a meeting.
If you can swing an intro, private credit offers flexibility banks can’t touch—but expect higher rates (typically 10–15% or more) and a relationship-driven process.
Asset-Based Lending: Got Stuff? You’re in Luck
If your business has significant tangible assets—accounts receivable, inventory, or equipment—asset-based lenders (ABLs) will happily lend against them. Unlike banks or SBA lenders, ABLs focus on collateral value, not cash flow alone.
Great if:
- Your business is asset-rich but cash-flow-challenged.
- You want more flexible terms and quick approvals.
Not so great if your business mostly relies on recurring revenue or intangible assets.
SBICs: Government-Backed Funding You’ve Probably Never Heard Of
When banks and private credit funds say no, SBICs (Small Business Investment Companies) step in. Licensed by the SBA, these private funds invest directly into small and mid-sized companies through mezzanine or junior debt—filling gaps when traditional lending runs dry.
SBICs are a solid option if:
- Your business already has senior debt from a bank and needs extra funding.
- You want more flexible financing terms.
- You’re comfortable with higher rates, possibly including equity kickers.
Check out the full SBIC directory here.
Digital Lending Marketplaces: Tinder for Business Loans
Don’t have banker buddies or country-club intros? No worries. Digital lending marketplaces like Arc Technologies and Cerebro Capital have emerged to streamline mid-market lending. They match you with banks, ABL lenders, mezzanine funds, and private credit providers—all digitally. We normally don’t recommend lending marketplaces (their incentives are still too “broker” like for our taste) but we make a firm exception for the $2-$10M deal zone because the dynamics here are just so different than the sub $1 million deal market where brokers, unfortunately, tend to dominate.
- Cerebro Capital: Think broad industry focus and deals from $2M–$100M. Good for a variety of industries and deal structures.
- Arc Technologies: Started in the tech and high-growth sectors but has since expanded significantly into the broader mid-market lending space. Operates a marketplace, but also provides direct funding in some cases.
Marketplaces simplify the process, reduce broker involvement (and their fees), and offer faster access to multiple lenders.
Quick Reference: Who Actually Lends in the $2M–$10M Space?
Skip the endless Google rabbit holes. Here’s your quick cheat sheet of active lenders and platforms:
| Lender/Platform | Lender Type | Industries | Revenue & EBITDA | Deal Types |
|---|---|---|---|---|
| Live Oak Bank | Regional Bank | General (sponsor-backed preferred) | $10M+ rev., $2M+ EBITDA | Senior term loans, SBA lending |
| Northwest Bank | Regional Bank | Distribution, services | $10M+ rev., $2M+ EBITDA | Senior term debt |
| White Oak | Asset-Based Lender | Manufacturing, Distribution, Logistics | Asset-focused businesses | Asset-backed revolving lines |
| Crestmark | Asset-Based Lender | Manufacturing, Distribution | Asset-heavy businesses | ABL revolving facilities |
| Seacoast Capital (SBIC) | SBIC Mezzanine Fund | General lower-middle-market | $10M+ rev., $2M EBITDA | Mezzanine, junior debt, equity |
| Spring Capital (SBIC) | SBIC Mezzanine Fund | Generalist | $10M+ rev., $2M EBITDA | Junior debt, mezzanine, equity |
| Arc Technologies | Marketplace & Direct | Tech, High-Growth & General Mid-market | Growth stage, recurring revenue | Senior/unitranche/mezzanine debt |
| Cerebro Capital | Digital Marketplace | All industries | $10M+ rev. preferred | Bank debt, ABL, mezzanine loans |
Remember and note that this is a small sample of the many thousands of banks, ABLs, mezzanine lenders, and SBIC funds that are out there. This isn’t meant to be an exhaustive list of places to search—it’s more of a starting point to get the creative juices flowing. This is still a space that hasn’t been very well digitized on the customer-acquisition side of things and where personal relationships and professional networks still dominate. That is changing but much work remains.
Industries Often Excluded by Banks (And Why Lender Specialization Matters)
If your business operates in certain industries, banks typically treat you like radioactive material—too risky to handle and best avoided altogether. But beyond banks just being risk-averse, there’s an important concept to keep in mind when seeking funding in the $2M–$10M range: specialization.
Unlike lenders who deal in smaller loan amounts (below $1 million), lenders operating in the lower-middle-market segment ($2M–$10M) are far less likely to be generalists. Instead, they specialize in industries where they have real expertise in risk management, underwriting, and servicing. This specialization can be both good and bad news:
- Good news: If your industry aligns with their specialty, you’ll have better terms, more flexible structures, and quicker approvals.
- Bad news: If you fall outside their sweet spot—or worse, into their restricted list—you’ll have a harder time finding financing at all.
Typical industries that many banks outright avoid or significantly restrict include:
- Cannabis & CBD (regulatory gray areas, federal vs. state law conflicts)
- Adult Entertainment (reputational and regulatory concerns)
- Firearms & Ammunition (legal complexities, political and reputational risks)
- Gambling & Gaming (highly regulated, compliance-intensive)
- Cryptocurrency & Blockchain (market volatility, regulatory uncertainty)
But the story doesn’t end here. Even if your industry isn’t explicitly excluded, specialized lenders in the $2M–$10M space will carefully evaluate their experience in your industry. Healthcare-focused lenders might not touch construction; manufacturing-focused lenders may avoid retail.
Bottom line:
Do your homework. Research lenders who have demonstrated expertise and a successful track record in your particular industry. It’s not just about finding a lender willing to say “yes,” but finding one who genuinely understands your business model and is equipped to support your growth.
Fintech Lenders: Fast Cash (With a Catch)
If you’re frustrated because banks, SBA, SBICs, or private credit funds haven’t exactly rolled out the welcome mat, you might be tempted to hit up fintech lenders. Fintechs promise speed, convenience, and less bureaucracy—and, surprisingly, sometimes they actually deliver.
But here’s the deal: Most fintech lenders tap out well under the $2M–$10M zone, typically offering loans ranging from $250,000 to around $1 million. If you need significantly more than that, your options get thin fast.
However, a couple of fintech lenders, notably Mulligan Funding and Libertas, occasionally step into higher loan amounts—potentially getting closer to your sweet spot. If traditional lenders or asset-backed folks won’t touch your deal, fintech can deliver faster approvals, fewer hurdles, and much higher chances of getting the cash you need.
But here’s the catch:
Fintech loans are significantly pricier than banks, SBA loans, ABL, or private credit. Before going down this route, make sure you’re confident your ROI comfortably exceeds the steep cost of capital. High interest rates can eat your profits alive if you’re not careful.
Bottom Line:
If you’re turned down by banks, ABL, SBICs, or private credit lenders—and speed matters more than cost—Mulligan and Libertas can be solid options. Just be clear-eyed about costs and repayment timelines. Fast money isn’t cheap, but neither is missing a critical growth opportunity.
Putting It All Together: Your Game Plan
- Banks/SBA: If you have strong collateral, cash flow, and plenty of patience.
- Asset-Based Lenders: If you have tangible business assets (inventory, A/R).
- Private Credit & SBICs: If banks say no or you need a flexible junior debt option.
- Digital Marketplaces (Arc, Cerebro): To save time, bypass brokers, and access multiple lenders quickly.
- Fintech Lenders: If all else fails, some fintech lenders can step up and get to yes for the amounts you are seeking.
Bottom Line
Finding $2M–$10M in working or growth capital isn’t easy, but it’s far from impossible. Understand what lenders want, use the right platforms, and understand your industry will be a better fit for some lenders rather than others. And remember: if a broker tells you they have an “exclusive lender,” that’s probably code for “highest commission.”
Need help or just want to complain about banks? Reach out to Diogenes—I’m blunt but honest, and always lender-neutral.
Good luck out there. May your loan approvals come swiftly and your interest rates stay friendly.