This article is part of Next Street’s NYC Funds Finder program, provided by NYC Department of Small Business Services and supported by Mastercard Center for Inclusive Growth as part of our series to educate and inform small businesses around financial literacy.

Did you know that funding solutions vary significantly depending on the stage of your small business, from startup to growth? With that in mind, NYC Funds Finder, created this helpful guide exploring how different financing options, such as microloans for startups and lines of credit for growing businesses, can best support your business at each stage of its development.    

Business stage 

Seed phase (pre-launch): You’ve got a solid business plan and registered your business, and you’re ready to take the next step toward launching. As you don’t have a revenue producing business, your best funding solutions might be: 

  • Microloans: If you don’t have a great credit score for a traditional bank loan, a microloan can be advantageous as many have flexible eligibility criteria with various loan sizes to help you get started. 
  • Crowdfunding: Crowdfunding loans are non-traditional loans and, therefore, have low eligibility requirements and low interest rates and fees. Often, the only requirement is to have a registered business and a strong social network – making it a great option for start-ups. 
  • Grants: Grants are essentially free capital to get you started. Many grants prioritize innovative ideas and/or offer assistance to underrepresented communities. 
  • Other types of funding options can include for those with good credit history traditional bank loans, SBA loans, and a host of other options can be found at NYC Funds Finder. 

Startup phase (0 – 1 year in business): Congrats on launching your business as you now focus on operations, strategy, marketing and optimizing your finances. At this stage, your funding options include:  

  • SBA loans: SBA-based loans can come with more favorable terms and longer payment periods. Additionally, some can be partially guaranteed to help reduce risk for lenders who might not want to loan to small businesses deemed too risky.  
  • Term loans: Term loans provide a lump sum of money upfront with a fixed payment schedule. They can be used for specific business needs such as purchasing equipment, marketing or working capital. These loans are ideal for those with a stronger credit history and/or with collateral backing. 
  • Other types of funding options can include business line of credit, microloans, grants and more.

Growth phase (3+ years in business): Overall your business is doing well and you’re looking to expand – maybe a new location, equipment upgrades or hiring more employees. Either way, you’re looking for the right funding solutions to help you grow such as:  

  • Business lines of credit: Ideal for those with good credit as they provide a pre-approved amount to borrow from, you pay interest on the amount you borrow versus from a term loan where you pay interest on the whole amount, and you can borrow and repay multiple times within the credit limit. 
  • SBA 7(a) loans: These are partially backed government loans from the Small Business Administration that can be used to help expanding small businesses with a variety of needs including equipment, working capital, purchase commercial property, refinance and more. 
  • Contract-based financing: Useful for businesses that can leverage their existing contracts as collateral (especially contracts with government or large corporations) and is ideal for construction and manufacturing companies, service providers and those with government contracts.  
  • Other types of funding options can include term loans, microloans or grants and can be found at NYC Funds Finder. 

Maturity phase (10+ years in business): At this stage your business is firmly established and running successfully, but maybe sales are slow or you’re looking to expand and grow. Either way, you have many funding options to leverage such as:     

  • Equipment financing: Ideal if part of your growth involves purchasing expensive equipment, as it allows you to use the equipment as collateral and repay the loan over a set timeframe with a fixed interest rate. This not only preserves your cash flow by avoiding a significant upfront capital outlay, but also may offer tax advantages through depreciation deductions, depending on the type of equipment and applicable tax laws. 
  • Commercial real estate loans: Ideal for businesses seeking to expand, purchase their own property, or refinance existing debt. However, they typically have higher interest rates, shorter payment periods, and higher down payments. 
  • Other types of funding options depending on your business revenue could include term loans, business lines of credit, various SBA loans, or grants. 

For NYC-based small businesses, NYC Funds Finder is your source to find the right financing solution that meets your business stage and connect with FREE business advising sessions. Visit NYC Funds Finder today.