Business growth is never a straight line. It comes with challenges, risks, and turning points that test your resilience—and your finances. One of the most critical aspects of navigating this journey is knowing how and where to source funding at each stage of your business lifecycle.
The type of lender that suits your business best will change as your company evolves. From the scrappy startup phase to growth and into long-term sustainability, your risk profile, financial needs, and lender options shift significantly.
In this guide, we break down how financing options change across three major business stages:
1. The Early Years
2. Beginning to Build
3. The Midlife Crisis (Mature Stage)
Describe how the type of lender will change depending on the lifecycle stage of the business.
The Early Years
These are typically the most difficult years to get finance and yet in many cases, the most critical for needing finance. As a Broker and Financier, I have helped many clients make the leap from employee to business owner.
The mainstream banks and lenders can be very reluctant to assist early stage businesses. This is because more than 60% of new businesses cease to operate in their first 3 years of existence. Not every business that closes because it has failed or the business went broke. In many instances, the owners simply give up and go back to regular employment. The pressures of long hours for uncertain income and not knowing how to organise the cash necessary to grow are all big issues in the first few years.
For Early Stage businesses, we are often working with smaller, specialist lenders who are prepared to look at the business model, the operator’s experience and other mitigating factors. Typically, these specialist lenders may charge higher interest rates to compensate for the risk involved and you must walk a fine line between what I would call a ‘specialist lender’ and a ‘loan shark’. Understanding your credit rating and cash flows and knowing the right lenders to approach is critical at this stage.
Beginning to Build
Assuming you’ve survived the early years and learned from a few mistakes, the next important step is to begin to grow your wealth and your asset base. Lenders look at ‘time in business’ (how long you have been operating) as a critical risk factor. The longer you survive, the better bet you become. The other important risk factor for a lender is your asset base. The reality is that people who own or have equity in a property are seen by lenders as a lower risk. This means faster approvals and better rates and the ability to generate fast cash to take advantage of growth opportunities.
This is a period in which it is critical to recognise that you are much more than a quality professional in your chosen field or trade. You need to recognise that you are also a business owner / operator. we’ve worked with tradies who are fantastic at what they do but after 10 plus years in business, are still struggling to make a decent profit and pay the rent. I’ve also worked with some extremely successful young tradies who are growing their businesses and their wealth. We can guarantee that it isn’t number of hours they put in that makes the difference or in many cases even the quality of their work. The successful operators have a good plan and work with quality professionals to ensure their success.
The Midlife Crisis
We don’t believe that any business lifecycle takes the elevator straight to the penthouse. The reality is that along the way there are going to be good times and tough times for us all. This I learned through my own bitter experience. As your business grows, it can be easy to imagine yourself to be bullet proof. In fact, I’d argue that it’s very hard not to.
At this time, I believe it’s important to start looking at your assets and wealth base and to start looking toward the time when you may want to ease back. The decisions you make today will have a massive impact on lifestyle later in life. Wealth creation for most of us is a long-term strategy, where relatively small adjustments made now will compound over the years and make a huge difference down the track.
Hopefully by this stage you are starting to build equity in your own home and are looking at wealth- creating opportunities. It is important at this stage to guard your credit rating and be as attractive to lenders as possible. It’s also critical at this time to review your risk factors. How long could you and your business survive if you were blindsided by the loss of a large client, a prolonged illness or a marriage breakdown? Unfortunately these things to happen to the best of people.
Final Thoughts
As your business grows and matures, so too should your approach to financing. The type of lender that fits your needs in the early days will likely not be the right choice once your business is established or entering a new phase of strategic growth. Each stage of the business lifecycle—whether it’s launching, building, or stabilizing—comes with unique challenges, opportunities, and risks. Understanding how lenders perceive your business at each point is essential for securing the right funding, on the right terms, at the right time. By aligning your financial strategy with your business stage and surrounding yourself with experienced advisors, you position yourself to not only access capital more effectively but to grow and protect your business long into the future.