Small Business Loans in New York: Find the Best Funding Options

Comparing Small Business Lending Options in New York

In such a competitive place, securing access to working capital can be the deciding factor in whether your business dies or survives. But whether you're a farming business Upstate replacing old work trucks before harvest, a coffee shop in the Hamptons financing renovations ahead of peak tourism season, or a New York City startup trying to hire and grow without running short on cash, there are a lot of options for getting access to working capital.

The Statewide Programs New York Businesses Should Know About

New York has several state-backed programs designed to help small businesses that might not otherwise have the information to find and qualify for funding.

This breakdown has a mix of actual financing options and also organizations that exist to help you through the process of seeking out and applying for capital.

Empire State Development Programs

The Empire State Development Program is a state-backed organization that, according to its website, aims to “promote a vigorous, inclusive and growing state economy, encourage business investment and job creation, and support diverse, local economies across New York State through the efficient use of loans, grants, tax credits, real estate development, marketing, and other forms of assistance.”

One of its initiatives is participating in the federal State Small Business Credit Initiative (SSBCI). The state, through this, has more than $500 million to help small, traditionally disadvantaged businesses succeed in the aftermath of the COVID-19 pandemic.

Some of the SSBCI programs are: the Main Street Capital Loan Fund, which gives startups term loans for up to $100,000; the Capital Access Program, which commits money to a dedicated loan loss reserve account to be utilized if a loan defaults; and the NY Forward Loan Fund 2, which helps small businesses and nonprofits with loans of up to $150,000 as well as business support services.

Excelsior Programs

The Excelsior programs are more focused on promoting economic development and business expansion than supporting the day-to-day capital needs of individual businesses. These programs are generally designed to encourage job creation and long-term expansion or investment.

The Jobs Program, for example, allows businesses to get certain tax credits over a period of 10 years for investing and creating new jobs. It's for businesses in:

Biotechnology, clean technology, or green technology

Pharmaceuticals

Financial services

Agriculture

Music production or entertainment

Manufacturing

Through the Excelsior Linked Deposit Program, the state makes deposits at participating banks at reduced interest rates, and the banks pass along those savings to small businesses who are then able to access lower-cost loans. It's more of a financing support mechanism than a direct loan or grant.

Pursuit (aka New York Business Development Corporation)

The New York Business Development Corporation (NYBDC), which is now called Pursuit, is one of the state's oldest business lenders. It's a regional Community Development Financial Institution (CDFI) that helps small businesses, especially minority- and women-owned businesses, in the Tri-state area access business loans.

CDFIs are mission-driven lenders that focus on improving access to financing. That means they tend to place emphasis on the broader business story and future viability rather than just strict underwriting metrics alone. The organization works a lot with SBA financing programs, and has helped lend more than $3.7 billion since its start 70 years ago.

New York SBA District Offices

The Small Business Administration (SBA) is a national government agency that helps expand loan access to more small businesses. They help broaden access to SBA loans, which are highly coveted because of their low rates, good terms, and the fact that they're partially guaranteed by the government.

New York has several SBA offices throughout the state, which are places to go if you are trying to get an SBA loan and need local guidance in the process or connections to SBA-approved lenders. There are offices in:

• Buffalo

• Rochester

• New York City

• Hauppage

• Syracuse

• Elmira

• Albany

Small Business Development Centers

Small Business Development Centers (SBDCs) give free (or low-cost) advising to New York small business owners and entrepreneurs. They can help with business plans, financial projections, loan applications, budget planning, and even business strategy.

It's good for new business owners who want guidance on increasing their chances of lending approval before actually applying or approaching lenders.

Federal Grants

Another option outside of local or state grants is federal grants, which you can search for on Grants.gov. The truth is, many of these programs are meant for fields and topics outside the scope of most small businesses, and are instead for companies or organizations doing research, science, agriculture, manufacturing, public initiatives, nonprofit work, and other innovations.

Certain startups could pursue Small Business Innovation Research (SBIR) or Small Business Technology Transfer (STTR) grants for research and development projects. But for most business owners, these are very difficult to get because of the intense application processes and reporting requirements.

NYC-Specific Programs Big Apple Businesses Should Know About

Apart from the statewide options we just went through, New York City has its own ecosystem of options specifically for businesses within its limits.

NYC's Department of Small Business Services

New York City's Department of Small Business Services (SBS) has a huge network of financing assistance, business education, and advisory programs (including free consulting) for local businesses. The agency connects businesses with lenders, grant opportunities, and consulting and legal services. Specifically, its website points out that it can help businesses start, operate, and grow by:

• Supporting minority and women-owned businesses with city certification and contract opportunities

• Connecting entrepreneurs with free resources, including business courses and legal support

• Helping business owners understand government rules and requirements

• Guiding entrepreneurs through funding applications to start or expand a business

This is especially meaningful in NYC because of the extremely high cost of commercial rent, expensive buildout costs, licensing complexity, and the intense market competition.

NYC Future Fund

The NYC Future Fund is an $80 million city-supported lending initiative that gives money to lenders that then offer financing to smaller and often underserved NYC businesses. The city partners with mission-driven nonprofits and community lending partners rather than issuing loans directly from the city itself. The loans can be for $25,000 and up.

To get one of these loans, your business has to make $50,000 in annual revenue. The funding is generally expected to be used for working capital, operational expenses, and smaller-scale growth financing.

TruFund Financial Services

Similar to Pursuit, TruFund Financial Services is a CDFI, meaning it serves local entrepreneurs in accessing capital. It specifically focuses on New York City and New Jersey small businesses, targeting those in low-income communities, and also partners with some of the other organizations we've mentioned on this list.

Hebrew Free Loan Society

The Hebrew Free Loan Society is unusual in that its whole mission is to offer interest-free loans. It has a lot of different programs, for everything from college to fertility treatments and homeownership.

Its Small Business Loan Program offers interest-free loans of up to $60,000 to low- and moderate-income residents of New York City's five boroughs, Westchester, or Long Island, meant to be used to help launch or expand a business. Loans are repaid in monthly installments starting three months after the loan is first received, and from there, you have anywhere from 12 to 36 months to repay it.

Interest-free lending programs are very rare in the small-business financing world, and getting one could be a huge help to your business.

Borough-Specific Community Lending Programs

Some of New York City's most impactful business support happens at the neighborhood and borough level rather than through larger channels. For example:

• Brooklyn Alliance Capital gives micro-loans of $500-$25,000 to underserved small and medium-sized businesses in Brooklyn run by minority and immigrant entrepreneurs.

• The Queens Economic Development Corporation offers small-business counseling, networking, workshops, and some financing assistance for businesses in Queens.

• The Bronx Economic Development Corporation helps connect businesses in the Bronx with micro-loans, grants, and technical assistance.

What Borrowing Looks Like Across New York

Every region of New York has its own dominant industries and, therefore, popular financing options. Here I'm diving into what lending tends to look like in the major cities, from local community development financial institutions (CDFIs) to city-level lending resources and programs.

SBA Loans: A Great Option for New York Businesses

As I explained earlier, the Small Business Administration is a federal agency that provides great loan options for small businesses in need of financing and with solid financials. These loans are highly coveted for their low rates, favorable terms, and government partial guarantee.

New York, in particular, has a lot of SBA-preferred lenders, which are basically lenders approved by the SBA to make certain eligibility decisions internally rather than waiting for full SBA review. That can really help speed up approval and funding timelines.

The SBA also has a loan guarantee program that partially guarantees loans made by approved lenders. That reduces risk for banks and other lenders, which can make it easier for businesses to qualify for financing they might not otherwise get through a conventional loan alone.

The perks of all of these programs also mean they're harder to qualify for. So just beware that lenders will look for solid financials, credit, and established business history.

Some of the most common SBA loan programs in New York are SBA 7(a) loans, SBA 504 loans, and SBA Microloans. They each have their own trade-offs and use cases, so here's a rundown of each of them:

SBA 7(a) Loans

The 7(a) loans are the most common and flexible of the SBA loans. They can be as much as $5 million and can be used for business needs like:

• Acquiring, refinancing, or improving real estate and buildings

• Short- and long-term working capital

• Refinancing current business debt

• Purchasing and installation of machinery and equipment, including AI-related expenses

• Purchasing furniture, fixtures, and supplies

• Changes of ownership (complete or partial)

• Multiple-purpose loans, including any of the above

SBA 504 Loans

The 504 loans can go up to as much as $5.5 million and are long-term, fixed-rate loans. They're meant to be used for things that promote business growth and job creation, like:

• Building construction

• Long-term use machinery or equipment

• Facility improvement

• Streets, parking lots, land, utilities

They're especially useful for New York's expensive and competitive commercial real estate market.

SBA Microloans

SBA Microloans are, as the name suggests, on the small side. They are only for up to $50,000, and according to the SBA website, the average loan amount is about $13,000. These are often geared towards newer businesses, and can be good if you only need a smaller amount of money for expenses like inventory, smaller equipment, and other startup expenses.

When To Turn to Online Lenders and Alternative Financing

Many of the options we've talked about so far are geared towards businesses with pretty strong applicant profiles, and that can afford to wait weeks or months for approval.

Online and alternative lenders are a good option for New York small businesses that might struggle to meet the standard requirements of traditional lenders, or need fast access to cash to deal with more urgent expenses.

Online lenders are basically just lenders that aren't banks and that tend to use alternative, digital-first methods to review applicant eligibility. The online process allows things to move a lot faster, and for would-be lenders to focus on things like revenue, cash flow, and performance rather than credit score or years' worth of history.

Clarify Capital, for example, is an online lending platform. We don't do the money allocating, but we run the application and approval process and then connect you to our network of 75+ lenders to explore financing options. Some of our applicants can apply, get approved, and receive funding all in the same day.

Here are some common lending options you might get offers for through online lenders:

Equipment Financing

Equipment financing is specifically for businesses that need to purchase new equipment, which can include everything from machinery to tech and vehicles. If you need to buy equipment but can't front the high cost on your own, this loan will help you spread out those payments over time.

Basically, the lender pays for the equipment (either directly or by reimbursing you), and then you make monthly payments (plus interest) over a set period, usually somewhere between one and six years.

Key to this funding is that the equipment serves as collateral, so if you default on payments, it can be taken away. The equipment-as-collateral part helps to reduce the lender's risk, making this a good option for lower-credit borrowers.

Term Loans

Term loans are provided by lenders as a lump sum and repaid with a set APR over a set period of time. Unlike equipment financing, it's quite flexible and can be used for a variety of business expenses.

There are short-term loans, which are paid back in a shorter window (usually anywhere from six to 36 months) and are typically more expensive. There are also long-term loans, which are harder to qualify for but offer better rates, higher loan amounts, and longer terms in general.

Business Line of Credit

A business line of credit is similar to a credit card. It allows you to spend up to a certain amount of money on a revolving basis, and you only pay back and accrue interest on what you use in a given period.

They usually have lower interest rates than regular credit cards, and using one can also help build back up your personal credit score if it's low (that is, if the lender reports payment activity to credit bureaus).

This type of funding is flexible but better for smaller, short-term expenses. The main caveat is that qualifying can be challenging, and rates can be high.

Merchant Cash Advance

A merchant cash advance (MCA) is a type of financing in which a business receives a lump sum up front in exchange for a portion of its future sales.

After getting the cash advance, you repay a fixed percentage of your daily or weekly revenue (called a holdback) until the agreed repayment total is paid off. That total is determined by factor rates instead of traditional interest rates. For example: An advance amount of $20,000 with a factor rate of 1.3 would equal a total repayment cost of $26,000.

The main caveat is that factor rates make this an expensive option. But qualifying is generally easier for those with thin financials or lower credit scores because lenders focus on revenue consistency and sales volume.

Minimum Qualifications

$10,000 in monthly revenue

Your business must earn at least $10K per month in a business bank account.

500+ credit score

You can get approved with any credit score. But the better your credit rating, the better interest rates lenders offer. Your FICO score should be above 500.

Minimum six months in business

Your company should be operational for a minimum of six months. This shows business lenders that your company is sustainable and won't go out of business.

Have a business bank account

Your Clarify advisor will need three or four months of your most recent bank statements to verify income. This is just to see you're actually making $10K+ month in revenue.

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The Most Popular Financing I See in Each Industry

These are some of the most common financing options I see New York businesses take on, according to their industry.

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Learn About New York Small Business Financing Through Clarify Capital

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FAQs About Small Business Loans in New York

Here are answers to questions I often get about small business loans, and specifically for New York businesses.