Crocs Pays 10%, Beachbody 21%: What Public DTC Actually Pays to Borrow in 2026

I get a version of this question every other week from a founder running a $20M to $80M DTC brand: "Our bank just quoted us SOFR + 350 on the renewal. Is that a fair deal or are we getting hosed?" The honest answer most CFOs give is "it depends on your covenants and leverage." That is true but unhelpful. The useful answer is to compare against what comparable public brands actually pay, which you can do because every public company discloses its credit facility terms in the 10-K and reports the interest expense it actually paid. So I pulled the data on 14 public DTC and ecommerce issuers for FY2025, layered in SOFR plus three benchmark credit indices from the Federal Reserve, and built the operator benchmark below.

The 14-peer cohort covers most of the public DTC universe: Lululemon (LULU), Revolve (RVLV), Stitch Fix (SFIX), FIGS (FIGS), Warby Parker (WRBY), YETI (YETI), Crocs (CROX), Honest Company (HNST), Vita Coco (COCO), Purple Innovation (PRPL), Allbirds (BIRD), Beyond Meat (BYND), Beachbody (BODI), and Etsy (ETSY). Combined FY2025 revenue: $26.7 billion. The effective interest rate spread across the cohort runs from 0.3 percent to 21.4 percent, a 21-point gap inside one industry.

The conversation founders should have with their bank is not "what is your best rate." It is "here is what comparable public brands disclosed as their stated revolver spread in their last 10-K. Why is your quote 200 bps higher?" That question has changed pricing in every renewal cycle I have run for a portfolio brand.

What "effective interest rate" measures and why it beats the headline spread

The number on your term sheet is the stated spread, usually quoted as "SOFR plus 350 basis points" or similar. SOFR is the Secured Overnight Financing Rate, the benchmark base rate that replaced LIBOR in 2023. A basis point is 1/100 of a percent, so 350 bps means 3.5 percent. With SOFR averaging 3.64 percent in April 2026, your stated rate at that spread is about 7.14 percent.

The effective interest rate is what you actually paid divided by the average debt balance you carried. It captures all the extras the stated spread misses: unused-line fees (typically 25 to 50 bps on the undrawn portion), agency fees, prepayment penalties amortized over the life of the facility, time spent at higher tiers of the leverage-based pricing grid, and any default-rate periods triggered by covenant trips. For public companies you can calculate it from two line items in the 10-K: interest expense from the income statement and average debt balance from the balance sheet.

Why does this matter for your business? Because the stated spread on your term sheet typically undercounts your true cost of capital by 50 to 150 bps. A SOFR + 350 facility with a 50 bps unused-line fee on a half-drawn revolver is closer to 7.6 percent effective, not the 7.1 percent on the cover page. Over a $5M average draw, that delta is $25,000 per year. Not catastrophic but real.

What public DTC actually paid in 2025

Here is the cohort sorted by effective interest rate paid in FY2025. Companies with no debt outstanding sit at 0 percent. Convertible-note issuers (Etsy, Beyond Meat) sit very low because their cash coupons are 0.125 percent and zero, with dilution being the trade.

The two extremes are the most instructive. Beachbody (BODI) at 21.4 percent effective reflects a Blue Torch Capital term loan refinanced in late 2024 after the company nearly tripped covenants on declining subscriber revenue. When your lender is a special-situations credit fund rather than a bank, the pricing reflects covenant tightness and recovery risk, not the underlying base rate. Crocs (CROX) at 10.1 percent effective is a different story: this is the all-in cost of the senior secured term loans Crocs took on to acquire HEYDUDE in 2022. Crocs has paid down roughly half that debt since acquisition and the rate continues to fall, but at FY2025 the legacy facility still drives a 10 percent print.

Purple Innovation (PRPL) at 5.0 percent reflects a fresh $125M facility taken in late 2025 to bridge the company through a turnaround. YETI (YETI) at 1.2 percent shows what a healthy mid-cap manufacturer pays on a small inherited term loan with strong asset coverage. Etsy (ETSY) at 0.6 percent and Beyond Meat (BYND) at 0.3 percent are not bank loans at all. Both companies issued convertible notes in the 2020 to 2021 low-rate window with cash coupons under 0.25 percent. The trade is dilution on conversion. Your private brand cannot do this.

The eight companies at 0 percent (Lululemon, Revolve, FIGS, Warby Parker, Vita Coco, Stitch Fix, Honest Co, Allbirds) tell their own story. More than half of the public DTC cohort runs with no traditional debt at all. They fund inventory and working capital entirely with cash from operations and equity. For Lululemon at $11B in revenue this is a luxury of scale. For Allbirds at $152M in shrinking revenue, the absence of debt is because no lender will write them. Either way, the message is that debt is a tool, not a default state. Plenty of well-run DTC brands operate without it.

The benchmark context: SOFR, Prime, BAA, and high yield

Before you can interpret what your bank is quoting, you need to know where the base rates sit. SOFR is the floor for any floating-rate revolver. Prime is what bank consumer products price off (less relevant for commercial credit but still quoted). BAA corporate is the yield on Moody's BAA-rated corporate bonds, which is roughly investment-grade corporate borrowing cost. US high yield is the effective yield on below-investment-grade corporate debt, which is the territory your private brand sits in if it were rated.

The big move in 2022 was SOFR going from 5 bps in January to 4.07 percent by December as the Fed hiked. SOFR peaked at 5.34 percent in mid-2024 and has been grinding down since. As of April 2026, SOFR sat at 3.64 percent, Prime at 6.75 percent, BAA corporate at 6.03 percent, and US high yield at 6.86 percent. The spread between SOFR and high yield (about 320 bps) is roughly what a non-investment-grade public corporate borrower pays above the risk-free rate. Your private $25M brand should price somewhere between BAA and high yield, plus a small-issuer premium.

The practical implication for your renewal: if your bank quotes you a stated spread that puts your all-in rate above the US high yield index (currently 6.86 percent), you are paying more than a public junk-rated borrower. That is sometimes justified by your size and collateral profile, but it is the right question to push back on.

Stated revolver spreads: what peers disclose in credit agreements

This is where the comparison gets useful. Every public company discloses the pricing grid for its credit facility in the 10-K. The number shown below is the lowest tier of each company's applicable margin schedule (best leverage ratio). Actual paid rates are higher when leverage is elevated.

The pattern is clean. Most healthy public DTC issuers price their bank revolvers at SOFR + 100 to 200 bps. Lululemon's unused revolver sits at 100 bps because the company is investment-grade-like on cash flow and has been profitable for two decades. Most others (FIGS, Revolve, Vita Coco, Warby Parker, YETI, Allbirds) cluster at 150 bps. Stitch Fix and Honest Company sit modestly higher at 175 to 200 bps reflecting weaker cash flow profiles.

The outliers tell you what credit deterioration costs. Crocs at SOFR + 175 bps on its senior secured term loan is a M&A facility with strong collateral (the HEYDUDE brand assets) and a fast deleveraging plan. Purple Innovation at SOFR + 500 bps reflects a turnaround facility with a non-bank credit fund. Beachbody at SOFR + 750 bps is a Blue Torch term loan, which is special-situations credit and prices accordingly.

For your $25M to $50M private DTC brand, this benchmark says: if you have positive EBITDA, clean monthlies, and asset coverage, your bank ABL or working-capital revolver should land at SOFR + 200 to 350 bps. If you are getting quoted SOFR + 500 from a bank, either your covenants are scary or you are talking to the wrong lender for your stage.

Does profitability get you a cheaper rate?

Founders intuitively believe higher operating margin should win a lower borrowing rate. The data across 14 public DTC peers in FY2025 says the relationship is much weaker than founders expect.

The two highest borrowing rates in the cohort sit at opposite operating margins. Crocs at 3.7 percent operating margin pays 10 percent on its debt (M&A facility, large collateral pool, fast pay-down). Beachbody at 2.2 percent operating margin pays 21 percent (turnaround facility, weak collateral, special-situations lender). Same approximate operating margin profile. Wildly different borrowing costs. The difference is what kind of lender you are talking to, not how profitable your last year was.

The lesson for your business: lenders price three things in this order: collateral quality, covenant headroom, and reporting discipline. Operating margin matters but as an input to those three, not as the headline number. A messy brand at 15 percent operating margin will pay more than a clean brand at 5 percent if the messy brand cannot deliver clean monthlies by day 15 of close.

Why this matters for your business

You probably did not get into ecommerce to think about credit-facility spreads. But the difference between SOFR + 200 and SOFR + 500 on a $5M average draw is $150,000 per year. At your gross margin, that is the difference between hiring one more person, running a bigger Q4 ad push, or just keeping the money. Worth getting right.

Where your $50M brand should expect to land

For a profitable $50M DTC brand with positive EBITDA, clean monthly close on day 15, inventory turn above 4x, and at least 18 months of operating history with the current ownership, your fair bank revolver pricing in 2026 is SOFR + 200 to 350 bps. With SOFR around 3.64 percent, that is an all-in rate of 5.6 to 7.2 percent, plus 25 to 50 bps in unused-line fees on the undrawn portion. Effective all-in cost: 6 to 8 percent.

If you are smaller ($10M to $25M revenue) you are likely talking to an asset-based lender rather than a traditional bank, and pricing moves to SOFR + 400 to 600 bps. If you are larger ($75M+ with strong EBITDA) and you have a competent CFO, you should be able to compete for terms in the SOFR + 175 to 250 bps range that public peers like FIGS and Revolve disclose.

Three things lenders price (and how to improve each one before your next renewal)

1. Collateral quality. Your inventory and receivables are the asset base the bank will lend against. The cleaner your inventory aging (how much is over 180 days), the higher the advance rate the bank will offer (typically 50 to 65 percent of eligible inventory). Spend the 60 days before renewal cleaning up slow-moving SKUs and writing down obsolete stock. This directly raises your borrowing base, which lets you draw more at the same rate or negotiate the rate down because the bank's downside is smaller.

2. Covenant headroom. Banks price the probability you will trip a covenant within the next 12 to 18 months. If your fixed-charge coverage ratio is sitting at 1.15x against a 1.10x minimum, the lender prices you for renegotiation risk. Get to 1.5x coverage before you renew and the spread will narrow. The cheap way is paying down debt with cash on hand. The smarter way is restructuring fixed costs that drive the denominator.

3. Reporting discipline. This is the most underrated and the cheapest to fix. Brands that deliver monthly financials on day 12 with no restatements get priced 50 to 100 bps better than brands that miss month-end and surprise the lender. The fix is process: a clean close calendar, a CFO or senior controller who owns it, and a 13-week cash forecast that the lender sees monthly. None of this requires raising more capital.

The covenant traps to negotiate out of

Three covenant types are negotiable but almost always written into the first draft of your term sheet. Push back on these or accept hidden cost:

• Fixed-charge coverage ratio (FCCR) tested monthly. Monthly testing is brutal in seasonal businesses. Ask for quarterly testing on a trailing-12-month basis. This costs the bank nothing and saves you the December panic of a single weak month tripping the covenant.
• Capex limits. A flat capex cap (for example, $500K per year) makes sense for the bank but kills your ability to invest in a warehouse expansion or new ERP. Negotiate a basket structure: $500K plus 50 percent of unused capacity carrying forward, plus a separate basket for permitted growth investments.
• Restricted payments / dividends to owners. The default term sheet bans owner distributions entirely. For an S-corp or LLC, this can trap you in a tax-distribution problem. Push for a permitted distribution basket equal to your projected tax distribution plus some headroom.

Each of these has cost zero for the bank to grant and saves you real money or optionality over the life of the facility. Your bank rep expects pushback on all three. Founders who do not push back leave money on the table.

Frequently Asked Questions

What is the effective interest rate and why does it matter more than the stated spread?

The effective interest rate is the total annual interest expense divided by the average debt balance you carried that year. The stated spread (for example, SOFR + 350 bps) is just the contract pricing. The effective rate is what you actually paid, all-in, including unused-line fees, agency fees, prepayment amortization, and time the rate sat at higher tiers of the leverage grid. For the 14 public DTC peers we benchmarked, the effective rate ranged from 0.3 percent (Beyond Meat's zero-coupon convertibles) to 21.4 percent (Beachbody's distressed-credit term loan). Most operators only ever see the stated spread on their term sheet, so they undercount their true cost of capital.

What should a healthy $50M DTC brand expect to pay for a revolver in 2026?

For a profitable $50M DTC brand with clean books, positive EBITDA, and decent inventory collateral, a bank ABL or working-capital revolver should price at SOFR + 200 to 350 bps in 2026. With SOFR averaging 3.6 to 3.7 percent in April 2026, that means an all-in cost of 5.6 to 7.2 percent. Add 25 to 50 bps in unused-line fees and you land around 6 to 8 percent effective. If you are getting quoted SOFR + 500 or higher from a bank, either your covenants are scary or you are talking to the wrong lender. Yeti's term loan prices at roughly SOFR + 150 bps as a $1.9B-revenue public peer, so that is the floor not the ceiling.

Why do Crocs and Etsy show such different effective rates if they both have over a billion in debt?

Capital structure. Crocs took on $2 billion in floating-rate senior secured term loans plus senior notes at 4.125 to 4.250 percent fixed when it acquired HEYDUDE in 2022, so its effective rate sits around 10 percent on the cash-paying tranches. Etsy issued $2.3 billion in convertible notes at 0.125 percent and 0.25 percent cash coupons in 2020 to 2021 when rates were near zero, with the trade being equity dilution on conversion. So Etsy's effective cash rate is 0.6 percent while Crocs is at 10 percent, even though both are roughly the same dollar size of debt. The convertible structure is not available to your private brand unless you go public, which is the lesson.

How do I actually negotiate my spread down at renewal?

Three levers, in order of impact. First, get a second bidder on the table. Even a regional bank quote forces your incumbent to sharpen by 50 to 100 bps. Second, clean up your monthly close cadence and audit history. Lenders price covenant risk above everything else, and a brand that delivers monthlies on day 12 with no restatements is genuinely cheaper to underwrite. Third, propose a covenant-lite structure if your cash conversion supports it: ditch the fixed-charge coverage covenant and accept an asset-coverage trigger instead. This typically wins 50 bps on spread plus eliminates the renewal anxiety. Bring a comparison to your peer set's disclosed pricing, sourced from their 10-K filings.

Is SOFR + 350 bps a fair quote for a $25M revenue ecommerce brand?

For a $25M ecommerce brand, SOFR + 350 bps is around the middle of the fair range. The honest answer is that at $25M you are sub-scale for most regional bank ABL programs, so your real competition is asset-based lenders (Wingspire, Gibraltar, Crystal) and revenue-based lenders pretending to be bank-like. SOFR + 350 from a real bank is a fair deal. SOFR + 500 from an asset-based lender is also fair if the bank will not write you. SOFR + 700 plus from a non-bank revenue financier is what you fall into when your books are messy and your inventory turn is below 3x. Fix the books, get the turn above 4x, and you save 200 to 400 bps.

Sources and methodology

All per-company financial figures sourced directly from SEC 10-K filings via EDGAR for fiscal year 2025 reporting periods (most recent annual filings as of May 2026). Cohort: 14 public DTC and ecommerce issuers selected from the broader public-company benchmark set Eightx maintains for portfolio benchmarking. Effective interest rate calculated as reported annual interest expense divided by the average of FY24 and FY25 total debt balance. Stated revolver spreads pulled from the credit-facility note disclosures in each company's most recent 10-K, using the lowest tier of the applicable margin grid (best leverage ratio).

SOFR, Prime, BAA corporate yield, and US high yield effective yield sourced from the St. Louis Federal Reserve (FRED), monthly averages 2022 to 2026. April 2026 is the most recent complete monthly observation. Caveats: convertible-note issuers (Etsy, Beyond Meat) show effective cash rates that are not comparable to traditional bank borrowers because the trade is dilution on conversion rather than interest expense. Companies with zero traditional debt outstanding (Lululemon, Revolve, FIGS, Warby Parker, Vita Coco, Stitch Fix, Honest Co, Allbirds) plot at 0 percent effective rate but are not free of capital cost: equity capital is also priced and generally above 10 percent expected return for ecommerce equity holders.