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11 Financing Options for Your Current Stage of Small Business Growth

The challenges of growing your small business are likely to change at different parts of its life cycle. Navigating these changes can become much easier if you plan for them, but the only way you can guarantee continued growth is to maintain flexibility in your funding. 

11 Financing Options for Your Current Stage of Small Business Growth


Though there are few rules governing the types of funding you can tap into, different financing options come with their own sets of pros and cons that make them more or less suitable for your business in its current stage. Let’s explore some of the funding types that you may want to look into per stage to help sustain your small business’s growth momentum:

Stage 1: Seed/Existence

This marks the inception of your business idea, when you’re still just preparing to launch your venture. Depending on the business type, this prep work can be quite expensive. Market research, product development, and initial planning can all cost quite a lot of cash depending on your business goals. At this stage, two important financing options to consider are:


  • Personal Savings. If you have limited goals, opting for self-funding is ideal since it gives you complete financial control and equity control. 

  • Friends and Family Loans. Another popular option is to seek financial support from friends or family members. While these loans can be quite flexible, you do run the risk of straining valuable personal relationships in the process.


Stage 2: Startup/Survival

This is the phase when you launch your business operations. Losses are generally expected in this stage, so you’ll have to focus on growing your market share and securing a strong cash flow. Two important financing options suitable for this stage include:


  • Bank Loans. Business banking loans are specifically designed to provide financing to entities like startups and small- and medium-sized enterprises (SMEs) so that they can access working capital, equipment purchases, or inventory. In the Philippine startup scene, SME-focused bank products like Maya Business’s Maya Flexi Loan are a popular way to give startups the safe funding they need at this critical stage.

  • Business Credit Cards. Some commercial banks and credit card providers offer special business-targeted credit cards. They have similar drawbacks to normal cards, but they do provide startups and SMEs with impressive financial flexibility for purchasing big-ticket items.


Stage 3: Growth/Success

At this point, your business will have carved out its niche and achieved a consistent positive cash flow. It probably no longer needs loans except to fuel further growth or to make up for serious emergencies. Make sure to consider these advanced financing options once your business hits this stage:

  • Revenue-Based Financing. This financing strategy involves obtaining capital in exchange for a percentage of future revenues. If your business has consistent revenue streams, this avenue can be a good way to avoid loans while still obtaining extra liquidity.

  • Invoice Financing. Also known as accounts receivable financing, invoice financing lets you borrow against outstanding invoices to access immediate cash flow. If your business has a good record at collecting invoices, this type of financing can be a relatively low-risk way to smooth over cash shortfalls during periods of rapid growth.


Stage 4: Expansion/Take-Off

This is when your business is set to spin off a new product line or expand into new markets. Unless your business has managed to accumulate big savings, you’ll likely need additional financing to facilitate these new ventures. Consider these three financing options to reduce your business’s vulnerability at this stage:


  • Equipment Leasing. Instead of purchasing expensive equipment outright, consider leasing arrangements to reduce your cost burdens.

  • Merchant Cash Advances. Merchant cash advances give your business immediate funding in exchange for a percentage of its future credit card sales. This option should be investigated if you’re involved in high transaction volume businesses like retail.

  • Equity Investment. Equity investments involve engaging venture capitalists, private equity firms, and angel investors to assume part of your business’s equity in exchange for funds to drive its expansion.


Stage 5: Maturity Stage

As the name implies, this stage is characterized by stability and consistent profitability. While you may still be expanding and adding more products, your main focus at this stage will be optimizing efficiency and maximizing profits. 

Strictly speaking, your business will probably no longer require external financing except, perhaps, to fund a new round of expansion. Still, you will want to consider certain financing options that can help increase operational efficiency and help secure your place in your niche, like the following: 


  • Term Loans. These loans provide a lump sum that is repaid over a given period with fixed interest rates. This option is suitable for financing very long-term investments such as facility expansions, ongoing research and development, and strategic acquisitions.

  •  Private Equity Recapitalization. This idea is broadly similar to equity investment with the main difference being the objectives of the funding. If you believe your business needs to increase cash flows and value creation, this option is more appropriate than equity investment.

Small Business Resilience Demands a Sound Financing Strategy

Selecting the right financing options at each life stage of your small business will keep you from assuming unnecessary risks in pursuit of growth. However, these suggestions should be taken as broad recommendations, not as strict rules. 

You should never leave out a financing option simply because it’s more often used at a different point of the business life cycle. But if you want to drive safe and sustainable growth, these guidelines should help maximize financial flexibility and business survivability at every stage of the journey.

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