Glossary
Time in business
Time in business is the length of a company's operating history, measured using formation, start-of-operations, licensing, banking, or tax records.
Time in business is the length of a company’s operating history. Funding partners may measure it from the entity’s formation date, the date operations began, the first business bank activity, licensing, tax filings, or another verified milestone. The exact definition and minimum requirement vary by program.
Key takeaways
- Formation date and operating date are not always treated as the same thing.
- Longer history provides more evidence of revenue, cash flow, and payment performance.
- New businesses may face lower transaction limits, stronger owner-credit requirements, or larger cash contributions.
- Relevant owner experience can help but does not change the entity’s actual age.
- Do not overstate time in business on an application.
How time in business is verified
A funding partner may use:
- Secretary of state formation record
- Business license
- EIN record
- Bank-account opening date
- First deposit activity
- Tax returns
- Commercial credit file
- Website or public records
- Prior invoices and contracts
A company formed three years ago but inactive until last month may not be treated as a three-year operating business.
Why it matters
Operating history helps an underwriter answer:
- Has the company generated consistent revenue?
- How does it perform through seasonal changes?
- Has it managed previous debt?
- Are deposits and expenses stable?
- Does the owner’s plan match actual results?
- Is the business still in an early survival stage?
A newer entity has less evidence, so underwriting relies more on the owner, equipment, contracts, cash contribution, and transaction structure.
Real-world example
An electrician formed an LLC in 2024 but continued working as an employee until June 2026. The company opens its bank account and begins customer work in July 2026.
A funding partner may treat the company as newly operating even though the entity record is two years old. The owner should explain both dates clearly.
Common misconception: industry experience equals time in business
Ten years of industry experience can strengthen a startup request. It does not make a newly formed company ten years old.
Both facts are useful:
- Entity operating history: three months
- Owner industry experience: ten years
Accuracy is more credible than stretching the definition.
How new businesses can strengthen a request
- Strong owner credit
- Personal guarantee
- Relevant operating experience
- Identified equipment
- Reasonable purchase amount
- Cash contribution
- Remaining liquidity
- Signed contracts or purchase orders
- Realistic projections
- Established seller
- Broad equipment resale market
Read the startup equipment financing guide for a complete discussion.
Sources
- State business records are maintained by each secretary of state or equivalent filing office.
Frequently asked questions
- Is one year in business enough?
- Some programs consider one year or less. Others require two years or more. The answer depends on the funding partner and transaction.
- Does changing the company name reset time in business?
- A simple name change may not. A new legal entity, ownership change, merger, or restart may require additional review.
- Can I use the age of a prior company?
- Disclose the prior company and experience, but do not represent the new entity as older than it is.
- Does VeriFunding work with startups?
- Some current funding partners consider startups and new operations, subject to their criteria.