17 – Time in Business Loan Requirements
Why does it matter how long I have been in business, you might be asking. It goes to the question of track record: those who have been around longer had shown staying power, they’ve shown that they can manage their business to date, and keep it running. Whereas, for those who have just started or have only been in business for less than a year, for example, you have not yet had the time necessary to establish any sort of history or pattern when it comes to your ability to run your company and make a go of it.
With more traditional lending terms, the institution with whom you are working generally likes to see that a company has been in business for a minimum of two years. However, with SBA backed loans banks may be willing to look at newer companies as long as everything else falls in line with their requirements. This is because the lender now has a guarantee from the government, making your company something of a safer bet.
If you do not qualify via a traditional lender because you haven’t had enough time in business yet, that doesn’t mean that you are totally out of the game. Online alternative lenders do not have as stringent requirements and sometimes even lend to those who have only been in business for a year, possibly even less. What can greatly help you out if you are a newer company is to compose a solid business plan. This shows any lender that you’ve done your homework, you understand the landscape and you’ve earnestly thought about your company’s place within the industry.
At First Union, we do look at time in business, but we also consider the entire picture. All parts of your application are weighted as we decide whether or not to offer you a business loan. So don’t give up on the idea just because you are a relatively new endeavor. Contact us today and let’s talk!
You’re reading part 16 of our 18-part series: 18 Business Loan Requirements.