Top Business Growth Financing Options by Stage

Trying to uncover your business growth financing options can be challenging, especially when so many are covered in red tape or otherwise blocked. However, new avenues open at each stage of growth. Below, we’ll explore your options at every stage, cover the pros and cons of each, and review what to look for in a funding solution to ensure it meets your needs.

Consider Your Stage When Exploring Business Growth Financing Options

The stage of growth your business is in is one of the biggest factors in determining which funding options are available to you and which ones make sense strategically.

Funding Must Evolve with Your Growth

At the very beginning, your biggest challenge is often survival. You’re figuring out how to cover initial costs like equipment, marketing, and payroll without a proven revenue stream.

As you grow, the challenges shift. Your business may need funding to smooth out cash flow while waiting for customers to pay or to invest in while scaling operations.

At later stages, it becomes less about survival and more about capturing new opportunities, like securing bigger contracts, entering new markets, or acquiring other businesses.

Different Options Fit Different Small Business Funding Stages

Each of the stages above requires varying amounts of capital while addressing the constraints of your business.

Early Stage

You don’t have a proven track record to reassure lenders or investors. Because of this, most businesses do not qualify for outside capital and rely more on creative approaches or personal funds. In fact, nearly 80 percent of small business owners use their own funds, according to Chamber of Commerce research.

Growth Stage

With your business now proven, more avenues for capital open. However, rigid lending criteria still hold businesses back, as nearly half do not receive full funding, and one in five is outright denied, according to the Small Business Credit Survey. Numbers dwindle further by funding type, with two in three being denied or underfunded when applying for business loans.

Mature Stage

Established businesses can take on larger obligations because they have assets, history, and systems to manage risk. This group has easier access to funding and typically receives more favorable terms when applying.

Financing Options for Startups and New Businesses

If your business is in its earliest days, financing looks very different from what it does later on. You’re dealing with limited or no revenue history, a short track record, and often unproven systems. That means traditional lenders are cautious and loan rejections are common. The good news is that there are still several paths available. You just need to understand which ones fit this stage best.

Common Startup Financing Sources: Startup Funding Comparison

Banks and other lenders typically want to see reliable revenue, a business history of at least two years, and collateral. A startup cannot usually check all those boxes, so options like large business loans are less accessible. Most startups rely on alternative sources and nontraditional financing options in the first few years.

Personal Savings and Sweat Equity

Many founders begin by investing their own money or reinvesting early profits. As mentioned, around 80 percent of business owners do this at some point.

Contributions from Friends and Family

Borrowing or receiving early investments from people in your personal network is one of the most common first steps. In fact, the Small Business Credit survey shows that 56 percent of businesses have done this in the past year. However, strained relationships are a common consequence, particularly when communication and expectations are not managed carefully.

Grants and Competitions

Local governments, nonprofits, and corporations often run grant programs or startup competitions. While these are attractive options because they typically do not require repayment, competition for funding is fierce, and strong applications are essential.

Microloans

Programs like the U.S. Small Business Administration’s microloan program can sometimes provide loans of up to $50,000. However, these still have requirements related to credit, and funds are typically earmarked for disadvantaged businesses.

Angel Investors and Venture Capital

If your startup has high growth potential, you may be able to secure outside investors who provide capital in exchange for equity. This can accelerate growth, but it comes with tradeoffs in ownership and decision-making, unless you opt for venture debt financing instead.  

Invoice Factoring

Additionally, invoice factoring for startups can sometimes be an option. Factoring is a unique type of funding that provides immediate working capital for your unpaid B2B invoices. Approval is reliant on your customers’ ability to pay, so even startups qualify. As a result, it only works for startups that have at least a few customers on the books paying invoices, rather than those truly just starting out with no revenue coming in at all.

Considerations When Choosing Funding for a Startup and Early-Stage Business Capital

At this stage, you’re often balancing speed with sustainability. Let’s go over a few things to keep in mind if you’re seeking funding as a startup.

You Must Provide Proof Over Promises

Investors, lenders, and even family and friends will want to see evidence that your business idea works. This could mean having a working prototype, early sales, or a strong business plan.

You’ll Need to Maintain Flexibility

Since your business will likely evolve quickly in the first few years, financing that allows some breathing room without rigid repayment terms or equity loss you might regret can give you the best chance of long-term survival.

Growth-Stage Businesses: Balancing Scale and Sustainability

Once your business has made it through the fragile startup phase, your funding needs change. At this point, you likely have steady revenue, paying customers, and proof that your business model works. The challenge now is finding capital that helps you sustain momentum and expand without overextending yourself.

Common Growth-Stage Financing Options

Growth introduces new pressures, such as larger payrolls, higher operating costs, and the need to take on bigger projects or fulfill larger orders. Cash flow often becomes your biggest pain point at this stage. Even if sales are strong, waiting for clients to pay on net 30 terms or longer can tie up the money you need to cover expenses or reinvest in growth. Because of this, solutions designed to provide working capital tend to be a better fit than early-stage funding sources.

Invoice Factoring

While factoring was touched on briefly as a startup funding solution, invoice factoring for growing companies can also be ideal because it scales with you. It’s also flexible, so you can factor on an as-needed basis, and it doesn’t add debt to your balance sheet. Additionally, some top factoring companies, like Viva Capital, can provide same-day payments, so it’s easy to rise to the demands of today.

Business Lines of Credit

A revolving line of credit from a bank or online credit can provide flexibility. You only borrow what you need and pay interest on the portion you use. This can make lines of credit helpful for bridging short-term cash flow, though, because they tend to come with higher interest rates, it’s important to pay them off as quickly as possible.

Term Loans for Expansion

With a stronger track record, you may qualify for traditional loans to finance equipment, facility upgrades, or geographic expansion. Lenders are more willing to approve short-term loans once you can show consistent financial performance.

Trade Credit

Negotiating longer payment terms with suppliers effectively creates financing by letting you hold on to your cash longer while still accessing the materials you need to deliver.

Considerations When Choosing Scale-Stage Financing Options

As a growth-stage company, you’re often balancing scalability with sustainability, which changes what to look for. Let’s go over a few things to keep in mind if you’re seeking funding as a growth-stage business.

Cash Flow Discipline

Choose tools that help you manage receivables and expenses without putting unnecessary strain on your balance sheet.

Scalability of Funding

As your business grows, your funding should grow with you. Flexible small business funding options like factoring and lines of credit can expand alongside revenue, unlike fixed short-term solutions.

The Cost of Capital

Because your business is more attractive to lenders now, you will see a wider range of options. Compare total costs carefully to ensure the funding aligns with your margins and goals.

Mature Companies: Optimizing for Expansion and Stability

When your business reaches maturity, the challenges you face look very different from those of a startup or a company in rapid growth mode. You may already have strong cash flow, a large customer base, and established operations. The goal at this stage is usually to expand strategically, strengthen market position, or diversify revenue streams. Financing is less about survival and more about opportunity.

Common Mature-Stage Financing Options

Mature businesses have an advantage: a proven track record. Years of financial statements, established assets, and reliable receivables make it easier to access larger, more cost-effective forms of capital.

Commercial Bank Loans

With collateral and a strong credit profile, mature businesses often secure favorable loan terms. These loans can be used for acquisitions, expansion, or major capital investments.

Corporate Bonds or Private Placements

Larger, established companies sometimes raise capital by issuing bonds or selling debt to private investors. These can provide significant funds for growth projects without diluting ownership.

Private Equity or Strategic Partnerships

Mature businesses with strong potential may attract private equity investment or partnerships. This is especially common when the business is trying to expand into new markets or launch new product lines.

Invoice Factoring

Many mature businesses continue leveraging invoice factoring to free up working capital and keep credit available for greater needs, like expansion. It’s also routinely leveraged by mature companies that need to account for seasonal swings.

Retained Earnings

Mature businesses often avoid the need for external financing altogether by reinvesting profits to fuel growth.

Considerations When Choosing the Right Business Funding for a Mature-Stage Company

Again, at this stage, you’re often optimizing for scalability and stability, which influences the ideal type of funding. Let’s go over a few things to keep in mind if you’re seeking funding as a mature-stage business.

Long-Term Strategy Alignment

At this stage, funding decisions should tie into long-term goals, such as mergers, acquisitions, or international expansion.

Balancing Cost and Control

Larger financing options often come with strings attached, such as restrictive covenants on loans or giving up equity in exchange for capital. Know when you’re willing to compromise, and when you’re not, especially as it relates to revenue-based financing vs. equity financing.

Diversification of Financing

Mature businesses often benefit from a mix of financing sources to avoid overreliance on a single tool and preserve flexibility.

Explore Tailored SME Funding Strategies

As a leading invoice factoring company, Viva Capital has been helping businesses at every stage of growth close cash flow gaps, build stability, and scale for decades. Whether you’re specifically looking for factoring solutions or aren’t sure what the right path is, we can help match your funding to your needs. To explore your options, talk with a factoring specialist.