Glossary

What is time in business in lending?

Time in business is the length of time a business has been operating as of the date of a credit or advance application. It is a core underwriting criterion for MCA funders and small business lenders — businesses with shorter operating histories are statistically more likely to fail, making time in business a direct proxy for repayment risk. Most non-bank funders require a minimum of 6 to 12 months in business.

Why time in business matters to funders

New businesses fail at higher rates than established ones. A business that has operated for two or more years has survived the highest-risk period, developed a customer base, and produced a track record visible in bank statements and revenue history. Funders use time in business as a hard screen — deals below the minimum are typically declined without deeper review.

Common minimum thresholds for non-bank funders range from 3 months (high-risk, high-rate products) to 24 months (for larger advances or more favorable terms). Equipment finance lenders often require 24 months minimum to qualify for standard programs.

How time in business is verified

Verification methods include: secretary of state filing dates (when the entity was formed), business license dates, bank account open dates, and tax return filing history. Funders should cross-reference multiple sources — entity formation does not always coincide with the start of actual operations, and some businesses operate informally before formal registration. The verification should be documented in the case file.

FAQ

Time in Business — common questions

Does time in business start when the entity was formed or when it started operating?

Funders define time in business differently. Most use entity formation date as the starting point for ease of verification, but some look at when the business first generated revenue or when the bank account was opened. The definition matters — a business formed two years ago that started selling six months ago has a different risk profile than one trading for two years.

Can a business under the minimum time in business ever get funded?

Some funders offer products designed for newer businesses — typically at higher factor rates, lower advance amounts, and with additional verification requirements. Startup programs carry materially higher default risk and require different underwriting criteria than standard MCA or equipment finance products.

Know your business (KYB) Ability to repay Average daily balance

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