Guide
Time in business requirements: what opens up at six months, one year, and two years
Age of business is one of the few requirements you cannot argue your way past. Here is what unlocks at each milestone.
How lenders measure it
Not from when you had the idea. Lenders generally count from the earlier of your entity formation date or the start of business operations, and most verify it against your EIN issuance date, your first business tax return, or your bank account opening date. Buying an existing business generally lets you inherit its operating history for underwriting purposes, which is one of the underrated advantages of acquisition over startup.
What opens at each stage
- Day one to six months
- Equipment financing against a specific asset, SBA microloans and CDFIs, business credit cards on personal credit, ROBS, and an SBA 7(a) with a large injection and strong experience. Not much else.
- Six to twelve months
- Most online lenders open up here — this is the most common minimum in fintech lending. Invoice factoring becomes straightforward. Revenue-based financing becomes available with platform history.
- One to two years
- The online market is fully open and pricing improves. Some banks will look at you. SBA is possible at lenders comfortable with younger businesses.
- Two years plus
- The threshold that matters most. Two filed business tax returns is the single most common hard requirement in commercial lending. Banks, mainstream SBA lending, and the best pricing all sit behind it.
- Five years plus
- Negotiating position. Multiple competing offers, covenant flexibility, and rates at the bottom of the published range.
If you are close to a threshold
- Twenty months in? Waiting four months for the second filed return can be worth several percentage points and a decade of amortization. Model both before deciding.
- Need something now? Take the smallest facility that solves the problem, on the shortest sensible term, and refinance once you cross the threshold. Check the prepayment terms first — a fixed-payback product cannot be refinanced advantageously.
- Bridge with equipment or factoring. Both are underwritten on assets rather than history, so the clock matters far less.
Questions people actually ask
Do I need two years in business for an SBA loan?
It is not a program requirement — the SBA sets no minimum. It is a lender preference, and a strong one. Startups do get 7(a) loans, but with a larger injection, documented industry experience, and a lender that actually does startup deals.
Does time in business count from incorporation or from first revenue?
Lenders vary, and most take the more conservative of the two. Expect verification against your EIN letter, your first filed business return, or your bank account history. If your entity was formed a year before you began trading, be ready to explain the gap.
Can I use my previous business's history?
Generally no for a new entity. But relevant operating experience in the same industry is a meaningful positive in underwriting a startup, and if you acquire an existing business you generally inherit its history for these purposes.