Can Startups or New Businesses Get Funded?

Byline: Anthony Collin

Businesses need at least 1 year of operating history to qualify for Smart Business Funding’s core Direct Fund Program. If your business is younger than that, SBF’s team can walk you through partner-placed alternatives that may fit your current stage, rather than simply turning you away.

Here’s why the one-year threshold exists, what it means in practice, and what options exist for businesses that haven’t reached it yet.

Why the One-Year Requirement Exists

The Direct Fund Program is underwritten primarily on revenue and cash flow rather than years of tax returns or hard collateral. But even revenue-based underwriting needs some operating history to work with — enough consistent transaction data to assess whether a business’s cash flow can reliably support repayment.

One year isn’t an arbitrary cutoff, and it’s worth being direct about what it does and doesn’t reflect: it’s not the industry’s easiest or most lenient time-in-business standard. It exists to give underwriting a clear, consistent picture of a business’s actual cash flow pattern — enough time to see revenue that’s not just a single strong month, but a trend that holds up.

What Counts as “Operating History”

Generally, the one-year clock starts from when a business began generating consistent revenue — not necessarily from the date of incorporation or when the business first opened its doors, if there was a gap between opening and generating meaningful revenue. This distinction matters for businesses that spent time in a pre-revenue setup phase before actually operating at volume.

What Happens If You’re Under One Year

Being under the one-year threshold doesn’t mean there’s nothing available — it means the Direct Fund Program specifically isn’t the right fit yet. SBF’s team can walk newer businesses through partner-placed alternatives that may be better suited to an earlier-stage business, including:

• SBA financing — government-backed loan programs with underwriting criteria distinct from MCA products
• Equipment financing — funding tied specifically to purchasing business equipment, often more accessible for newer businesses because the equipment itself serves as security
• Term loans — traditional structured loan products through partner lenders
• Lines of credit — revolving credit options that may have different eligibility criteria than a lump-sum advance
• Credit card processing — payment processing arrangements, relevant for businesses building transaction history

These are placed through SBF’s partner network rather than funded directly through the Direct Fund Program, and eligibility criteria for each vary by the individual partner and product.

Understanding Why Time-in-Business Is a Distinct Signal From Revenue

It’s worth understanding why time in business is evaluated as its own requirement, separate from the revenue threshold. Revenue tells underwriting how much cash flow a business currently generates; time in business tells underwriting how reliably repeatable that cash flow pattern is likely to be. A business that hit $60,000 in its very first month of operation, off the strength of a single large contract or a promotional launch, hasn’t yet demonstrated that the pattern holds up over time — through slow months, seasonal shifts, or normal business fluctuation.

This is why a strong single month, or even a strong first quarter, isn’t a substitute for the one-year threshold: the requirement exists specifically to observe a business’s revenue pattern across enough time to distinguish a genuine, sustainable trend from an early, possibly unrepeatable spike.

Case Study: A Composite Example

The following is an illustrative, composite scenario based on common patterns among newer businesses — not an actual client case.

Consider a beauty and personal services business — a med spa — that opened nine months ago and has seen strong early revenue, averaging around $70,000/month for its most recent three months, driven partly by an aggressive opening promotion. The owner, confident in the business’s trajectory, applies for the Direct Fund Program to fund a second treatment room buildout, expecting the strong recent revenue to carry the application.

Because the business is three months short of the one-year requirement, it doesn’t qualify for the Direct Fund Program yet — but SBF’s team walks the owner through an equipment financing option through a partner lender, suited to funding the specific buildout need without requiring a full year of operating history. Three months later, once the business clears the one-year mark with revenue that has held steady rather than dropped off after the opening promotion ended, it becomes a strong candidate for the Direct Fund Program directly. The educational point: the one-year threshold isn’t a rejection of the business’s potential — it’s a mechanism to confirm that potential has become a demonstrated pattern.

What to Do in the Meantime, If You’re Not Ready Yet

For businesses that are close to the one-year mark, or building toward it, a few things matter most for future eligibility:

• Consistent revenue documentation. Keep clean, organized business bank statements — this is the core documentation underwriting relies on once you do hit the one-year mark.
• Steady or growing monthly revenue. A trend that holds up matters more than hitting one exceptional month.
• Building toward the $50,000/month revenue minimum, which applies alongside the time-in-business requirement once you’re eligible for the Direct Fund Program.

Why Banks Are Typically Even Stricter Here

Traditional bank and SBA underwriting commonly requires two or more years of business tax returns, which puts businesses under two years in an even tighter position with conventional lenders than with MCA funding. The one-year MCA threshold, combined with revenue-based underwriting, means qualifying businesses can often access funding a full year or more before they’d be considered by a bank.

Full Eligibility Snapshot (Once You Reach 1 Year)

• Funding amount: $10,000–$5,000,000
• Terms: 2–10 months
• Credit minimum: ~500, soft pull only
• Time in business: 1 year minimum
• Monthly revenue: $50,000/month minimum
• Underwriting: 1–5 hours; same-day or next-day funding common
• Repayment: Daily or weekly
• Available in all 50 states

Industries We Fund

This one-year standard applies consistently across every industry SBF’s Direct Fund Program serves, including restaurants, healthcare practices, distribution, construction, e-commerce, education, fitness, and agriculture.

Frequently Asked Questions

Is there any way to qualify for the Direct Fund Program before one year in business? The one-year requirement is a firm baseline for the Direct Fund Program itself. Businesses under that mark are better served by partner-placed alternatives suited to earlier-stage companies.

Do partner-placed alternatives have the same $50,000/month revenue requirement? No — eligibility criteria vary by partner and product, which is part of why these alternatives can work for businesses that haven’t yet reached the Direct Fund Program’s thresholds.

Does a change in business structure (like incorporating an existing sole proprietorship) reset the one-year clock? This depends on the specifics of the transition and is best discussed directly with an underwriter, since continuity of operations and revenue history are typically what’s evaluated.

What documentation should a newer business have ready? Clean, organized business bank statements showing consistent revenue are the most useful thing a newer business can have ready, both for partner-placed options now and for the Direct Fund Program once eligible.

Talk to Our Team About Your Stage

Whether your business is approaching one year or still earlier in its journey, SBF’s team can walk you through what’s actually available right now.

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