Do I need to be in Business for at Least 2 Years Before I can Apply for a Loan?

A few years ago, you did need to be in business for a minimum of 2 years, providing two years of tax statements to be able to apply for a loan.

Today, the answer varies depending on the lender. It’s not how long you’ve been in business but whether your business is financially stable. Lenders want to see that your business is financially growing and that you have sufficient money to make repayments now and in the future.

Every vendor has its assessment variables, so it pays to know how your lender works before you make a loan application.

For business owners who’ve been trading for one to two years, selected lenders may consider your application if you’ve been in the same line of work for some time prior to starting your business, and you can provide 12months' worth of financial statements.

There are many reasons why business owners can’t provide 2years' tax returns or other financials confirming their income. It’s often just a matter of the business owner being behind on their tax requirements, rather than a reflection of financial problems. In the circumstances like this, there are low-doc business loan solutions offered by both major banks and non-conforming lenders.

Knowing which product is suitable for your business needs and which lender to apply to is tricky. In addition to the different ways each lender will look at your tax returns, other aspects of your situation may betaken into consideration to strengthen your case. This includes your skills and experience in the industry or the actual risk profile of the industry that you’re working in.

You don’t want to waste time applying with one lender only to find that you don’t fit their criteria much later down the line. Lending policies change pretty regularly depending on their appetite for business owner loans and particular types of professionals. SFE Loans keeps on top of these changes and so we can suggest lenders that suit your business needs and assist you with applying for your business loan.

Check out our InfoHub for past articles on lending advice and tips for Business Owners.

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