How To Get a Small Business Loan in New York

lthough you probably think of big business when you think of New York—with its looming skyscrapers serving as monuments to the titans of industry—small businesses comprise 98% of all businesses in the state and employ almost half of the workforce. With the third-largest economy in the U.S. and the 10th-largest globally, New York offers many opportunities for entrepreneurs.

Regardless of how innovative or unique your business idea is, though, securing the necessary funding to bring your dream to life will likely be your biggest hurdle. Fortunately, if you’re starting a business in New York, you have some promising options.

Small business loan options in New York

New York offers many of the traditional avenues of funding that you can find in any state, such as big bank loans and Small Business Administration (SBA) loans. But the following loans are specific to New York state businesses and can provide alternatives if you’re having trouble qualifying for more traditional funding.

NYC Capital Access Loan Guarantee Program (Cap Access)

The New York City Economic Development Corporation runs Cap Access. It guarantees up to 40% on loans for qualified micro and small businesses based in NYC. You can use funds from Cap Access for:

• Working capital
• Tenant improvements
• Purchasing equipment
• Refinancing existing loans

Grameen America

Grameen America is a comprehensive resource to help low-income minority women build businesses to enable upward financial mobility. Loan amounts start at $2,000, and successful applicants also get financial training and support. Its proven model is built on Nobel Peace Prize Laureate Muhammad Yunus’s idea that people can lift themselves out of poverty through their own efforts and entrepreneurial spirit.  

Job Development Authority (JDA) Direct Loan Program

The JDA Direct Loan Program provides loans for manufacturing and other eligible businesses. These loans can’t be used for retail facilities, hotels or residences, vehicles, or working capital. Instead, they’re designed to encourage the growth of manufacturing and can be used for:

• Purchasing real estate or building new facilities
• Renovating existing buildings
• Paying other real estate transaction costs
• Buying machinery and equipment (must be fixed to the building)

JDA will fund up to 40% of the total cost for real estate or machinery and equipment (M&E) projects. It may fund up to 60% for projects in economically distressed areas.

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Small business grant options in New York

Grants are the holy grail of funding for business owners because they don’t have to be repaid. You can think of them as scholarships for entrepreneurs. Like scholarships, they require hard work and merit, and the competition is fierce. Most grants are reserved for nonprofit organizations or businesses that are developing new technologies. However, if you qualify, there’s no better option for securing capital.

Global NY Fund Grant Program

The Global NY Fund offers grants for starting or expanding global exports. The program will reimburse 50% of project costs up to $25,000 for small businesses. For nonprofits, the amounts are more generous, at 75% of costs up to $100,000. Empire State Development sponsors this grant, and you can apply on its website.

New York StartUP! 2023 Business Plan Competition

This business plan competition awards up to $15,000 for new startups. To qualify, your business must be located in The Bronx, Staten Island, or Manhattan, and you must live there, too. Because this is for new startups, you can’t have earned over $10,000 from your business. 2024 applications will be available in the fall of 2023.

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Other loan alternatives

Loans and grants aren’t the only options for funding your small business. Funding is often a mix-and-match endeavor. You may want to explore some of the following sources of funding instead of, or in addition to, loans and grants.

Merchant cash advance

A merchant cash advance (MCA) is a business loan that uses your past credit and debit card sales to provide an advance against future sales. The advantage of using an MCA is that funding is often very fast. If approved, payments are usually taken out of your merchant account or bank account via a daily or weekly direct debit. The downside of an MCA is that it is more expensive than many other types of funding, with fees that are often far higher than traditional loan interest rates. More on merchant cash advances here.

Invoice factoring

Invoice factoring can be a viable option if you have enough outstanding invoices. Factoring companies will pay you upfront for your accounts receivable and then collect from your customers. Factoring companies make money by buying your invoices at a discount and then collecting the entire amount. Some companies pay up to 95% of the invoice’s value. This can be a good option if you need quick cash and have slow-paying customers.

Crowdfunding

Crowdfunding platforms like Kickstarter and Indiegogo let you raise small amounts of money directly from individuals who want to support you. You’ll have to meet the guidelines for the platform, which may include restrictions on how long you can fundraise and what you can use funds for. Crowdfunding can be difficult in today’s attention economy, but the results can be fantastic if you have an idea for an innovative product people want that’s unavailable.

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Improving your chances of getting a small business loan in New York

You’ll need to meet the lender’s eligibility requirements to get a small business loan in NY. Some lenders have a lower bar to qualify than others, but most traditional lenders will want to see the following qualifications:

• Credit score of 640
• At least one year in business
• $500,000 in annual revenue

However, many lenders, particularly those that target underserved business owners, have more flexible requirements. The following tips will help you improve your chances of getting a loan:

• Improve your personal credit
• Create a strong business plan
• Lower your debt-to-income ratio
• Keep your daily bank balance as high as possible
• Increase your revenue as much as possible before applying
• Understand your business and personal credit scores

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Get fast funding with Novo

Although obtaining funding isn’t always easy, you have many options for starting a business in New York. Whether you’re seeking a loan, grant, or other alternative funding source, getting your financial information in order before you apply will help you qualify.

Novo’s business banking lets you access your most important banking information from any device. And now, Novo makes it even easier for you to grow your business with Novo Funding. Access up to $75,000 instantly to take your business to the next level. Reach out today to learn more.  

Novo Platform Inc. strives to provide accurate information but cannot guarantee that this content is correct, complete, or up-to-date. This page is for informational purposes only and is not financial or legal advice nor an endorsement of any third-party products or services. All products and services are presented without warranty. Novo Platform Inc. does not provide any financial or legal advice, and you should consult your own financial, legal, or tax advisors.

Merchant Cash Advance products and services are offered by Novo Funding LLC (“Novo Funding”), a wholly owned subsidiary of Novo. Merchant Cash Advances require a Novo checking account.

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Novo is a fintech, not a bank. Banking services provided by Middlesex Federal Savings, F.A.: Member FDIC.