Small Business Loans
Learn All About Small Business Loans in New York
About 2.4 million small businesses are located in New York, and together they account for approximately 99.8% of all enterprises in the state. From the global financial hub of Manhattan to the vineyards of the Finger Lakes and the manufacturing centers of Western New York, these companies employ close to half of the state’s workforce.
Whether you’re launching a fashion startup in Brooklyn or expanding a dairy farm in the Hudson Valley, finding small business loans in New York can be a key step to helping your business grow. Here’s what you need to know about securing financing for your company.
- Key Points
- • The Main Street Capital Loan Fund makes flexible loans of up to $100,000 to startups and early-stage businesses.
- • The Bridge to Success Loan Program offers short-term financing to minority- and women-owned contractors working on state projects.
- • Nonprofit lender Pursuit administers multiple loan programs, acting as an alternative to traditional commercial banks.
- • The Global NY Fund provides grants to businesses seeking to enter international markets or expand their exporting activity.
- • Upstate manufacturers frequently use equipment financing loans to modernize aging infrastructure.
Popular Types of Small Business Loans in New York
Entrepreneurs in the Empire State can tap into a vast financial infrastructure ranging from Wall Street banks to community-focused state funds. The sections that follow discuss the most common funding options available to business owners across New York.
New York Small Business Loan Programs
The state actively encourages economic growth through Empire State Development (ESD). For instance, among other funds, ESD operates the Main Street Capital Loan Fund, which works with the nonprofit lender Pursuit to make flexible loans of up to $100,000 to startups and early-stage businesses that might have trouble accessing credit.
Additionally, the Bridge to Success Loan Program provides qualified minority- and/or women-owned business enterprises (MWBEs) with funding to help them execute government contracts. And Pursuit also administers multiple loan programs designed to help small businesses.
Term Loans
With a term loan, a lender provides a small business with an upfront lump sum of capital. The borrower repays the principal, along with interest (which is usually charged at a fixed rate), over a defined period of time. Having a predictable repayment structure can be useful as you budget into the future, and because the funds come as a lump sum, such loans can be well-suited to funding large one-time investments. For example, a tech firm in Troy might use a term loan to renovate a new office space.
Business Lines of Credit
Unlike a term loan, a business line of credit can let you access a pool of funds that you can draw from when you need funding, up to the limit predetermined by the lender. Typically, you’ll pay interest only on the money you actually withdraw, and as you repay the balance, you’ll replenish the pool of funds so the money becomes available for you to withdraw again.
Lines of credit can be especially helpful for businesses that have seasonal lulls or uneven cash flow. For instance, a restaurant in Buffalo could use a line of credit to manage extra food inventory costs during a busy sports season.
Equipment Financing
When your business is in need of a specific physical asset, like machinery, vehicles, or technology, you could consider applying for equipment financing. A construction company in Queens could use an equipment financing loan for a new crane, while a winery on Long Island might use one to acquire new fermentation tanks.
Because the equipment itself serves as collateral and reduces the lender’s risk, equipment financing loans tend to be easier to obtain than unsecured loans. Additionally, they often come with more favorable terms.
Small Business Administration (SBA) Loans
Small businesses obtain SBA loans from approved private lenders, but these lending staples are partially guaranteed by the U.S. Small Business Administration. This federal backing often lowers risk for the lender so the loan may permit lower down payments and/or longer repayment terms. If you qualify, these New York business loans are available through many banks and credit unions.
Below are the types of SBA loans that may be the most useful for small businesses.
• The SBA 7(a) is extremely flexible: The amounts can range from $500 to $5 million. It’s suitable for covering working capital, refinancing debt, or purchasing supplies.
• The SBA 504 loan is specifically meant for companies to use on major fixed assets, such as commercial real estate or heavy equipment. The maximum amount is between $5 million and $5.5 million.
• The SBA Microloan is meant to help with short-term needs and can be useful to companies that need startup loans. You can borrow up to $50,000 and the maximum repayment term is seven years.
An SBA loan calculator can help you estimate what your loan costs might be for different kinds of SBA funding.
Recommended: Small Business Financing Guide
How to Apply for a Small Business Loan in New York
Applying for New York small business loans often requires you to provide lenders with an in-depth, easy-to-understand look at your company’s financial well-being and a defined plan for how you’ll spend the funds you receive.
Here’s a step-by-step breakdown of how to apply for a small business loan in New York.
Define Your Loan Purpose and Amount
Before you reach out to any lenders, it may be a good idea to have a precise understanding of your funding needs. Ideally, you should be able to articulate exactly how much money your business needs and how it will generate a return. A specific proposal, such as “$75,000 to upgrade our point-of-sale systems, which we project will raise revenues by 5%,” demonstrates to lenders your financial planning and strategic thinking.
Know Your Credit Score
Prospective lenders are likely to pay particular attention to your credit profile when reviewing your New York business loan application, and they’ll probably scrutinize your personal credit scores: Traditional banks often require a credit score for a business loan in the range of 680 or higher. Other lenders, like online banks, may be willing to consider slightly lower scores.
Due to the importance of your credit scores, it can be a good idea to review your credit reports before you apply so that you can spot any inaccuracies and have them corrected. This will also let you more fully understand your financial situation before you submit your application for a New York small business loan.
Gather Your Key Documents
Providing a potential lender with a loan application package that’s organized and complete can speed up the review process and demonstrate that you’re reliable, efficient, and motivated. While requirements vary by lender, you should generally be ready to provide the following:
• Credit report
• Income statement
• Bank statements
• Budget
• Income tax returns (both business and personal)
• Business plan
• Collateral valuation and supporting documents (which may include titles, deeds, or invoices)
Compare Lenders and Loan Offers
As you’re assessing New York small business loans, it can be important to shop around to find the funding that best suits your needs, since different banks can offer very different options for the same loan type. It can also be a smart move to compare options from multiple kinds of sources, including small local banks, large national institutions, and online lenders.
As you evaluate financing proposals, it may be helpful to use a business loan calculator to estimate the monthly payments for your different choices. It can also be a good idea to look closely at the Annual Percentage Rate (APR) of each loan to understand its full cost.
Submit Your Application and Await Approval
Once you’ve filled out the loan application form and gathered your supporting documentation, you should be ready to submit the application package. After that’s done, you’ll have to wait for the lender’s response. This can take as little as two days in some cases, but may require several weeks in others.
Tips for Improving Your Loan Approval Chances
Lenders will typically want to see evidence of your business’s stability as well as its ability to repay the loan. Taking steps to strengthen your company’s financial profile before you apply might help you increase your chances of securing a loan. Here are some strategies to think about trying:
• Make sure that you’ve got a realistic business plan with detailed financial projections.
• Work on building your business and personal credit scores by paying down your current balances and making timely payments.
• If you have collateral available, consider offering it as security to potentially bolster your application’s chance for approval with certain New York business loans.
Other Funding Options for New York Small Businesses
If a traditional loan isn’t the right fit for your company, there may be other ways to fund your business. New York’s entrepreneurial ecosystem offers several alternative pathways to capital. One or more of these options may align better with your business’s specific stage of growth or industry.
Small business grants are highly sought after because they don’t require repayment, and grants are available in New York. For example, the Global NY Fund offers grants to help businesses market their products internationally, while the New York State Small Business Seed Funding Grand Program provides grants up to $25,000 to early-stage small and micro businesses. You may also be able to find industry-specific federal grants on national databases like Grants.gov.
Crowdfunding could be another viable route. Using a crowdfunding platform can allow you to raise smaller amounts of capital online from a broad base of supporters.
Additional Business Resources in New York
Succeeding in business often requires more than just capital. Generally it requires experienced guidance and a strong, supportive community. Fortunately, New York has a robust network of resources designed to help small business owners navigate challenges. The New York Small Business Development Center (NYSBDC) is a notable resource, offering no-cost advising at centers statewide.
In terms of mentorship, local SCORE chapters connect entrepreneurs with experienced business leaders who volunteer their time. Additionally, the Entrepreneurship Assistance Centers (EAC) provides instruction and assistance to new business owners. Engaging with your local Chamber of Commerce could also provide you with valuable networking opportunities.
The Takeaway
Securing a New York small business loan can be the deciding factor that allows your company to expand and prosper. While the process can seem daunting, by defining your goals and utilizing the available resources, you should be able to find the right financing solution for your company.
If you’re seeking financing for your business, SoFi is here to support you. On SoFi’s marketplace, you can shop and compare financing options for your business in minutes.
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FAQ
How do I get a small business loan in New York?
To apply for a New York business loan, start by defining your funding needs clearly and checking your credit scores. Next, gather essential documents like your business plan, tax returns, and bank statements to facilitate completing your application. Finally, compare options from various lenders to find the best terms available for your New York small business loan.
Can I get a startup business loan with no money?
Obtaining a startup business loan with no money can be challenging, since most lenders require an owner’s investment. However, some SBA microloans are designed for startups and may be easier to get. Another option is to research business grants, which provide funding that doesn’t need to be repaid.
How hard is it to get a small business loan in New York?
The degree of difficulty depends on factors such as your business’s financial health, time in operation, and credit history. Traditional bank loans can have rigorous requirements, while online lenders are often more flexible.
What is the easiest type of business loan to get approved for?
Loans secured by collateral, such as equipment financing loans, are generally easier to obtain because the asset lowers the lender’s risk. Short-term loans and invoice financing from online lenders also typically have less stringent requirements.
What credit score do I need for a small business loan?
Requirements differ, but for traditional bank and SBA loans, a personal credit score of 680 or higher is often preferred. However, some online lenders may approve applicants with scores in the low 600s. Higher scores generally lead to better approval odds and lower interest rates.
What can I use a New York small business loan for?
You can use a small business loan for almost any legitimate business purpose — but not for personal expenses. Common uses include purchasing inventory, buying equipment, funding marketing campaigns, or refinancing debt.
Are there any small business grants available in New York?
Yes, grants are available from a variety of sources. Empire State Development can be a resource for finding state-level opportunities like the Global NY Fund Grant. You can also search national databases like Grants.gov for federal programs relevant to your industry.
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