The honest answer depends on what you mean by "new." Six months in is fundable. Three months in is mostly not. Below: the actual time-in-business floor by funder tier, what compensates for short history, and the realistic factor rates new businesses see.
Time-in-business thresholds by funder tier
- Less than 4 months: almost no funder will write the deal. The risk model says default rates are too high for files this fresh.
- 4-6 months: a small specialty pool. Factor rates 1.50+. Advance capped at $15K-$25K. Most files require strong personal credit (650+) to compensate.
- 6-12 months: standard funder engagement begins. Factor 1.40+. Advance capped around $50K. Personal credit and statement health are heavily weighted.
- 12-24 months: standard zone. Factor 1.30-1.40. Advance up to $100K typical.
- 2+ years: full funder pool. Factor 1.25-1.35. Advance up to 1x of monthly revenue.
The math under those thresholds: funders price files to default risk, and businesses under 12 months default at 2-3x the rate of mature businesses. The factor rate compensates.
What "time in business" actually means
Funders compute time in business from the earliest of three sources:
- The date your business bank account was opened
- The date your EIN was issued
- The date your business entity was formed (LLC, corp, etc.)
If you've been operating as a sole proprietor for 2 years and just formed an LLC, some funders will count from the LLC formation date (recent), others from the bank-account-opening date (older). Ask the underwriter which they're using.
What compensates for short time in business
Three factors can move a 4-12 month file from declined to fundable:
- Strong personal credit. 700+ FICO unlocks startup-friendly funders. Below 600 narrows the pool to almost nothing.
- Strong revenue from day one. A new business doing $50K/month from month 3 is a different file than one doing $8K/month from month 3. The funder is looking at trajectory, not just history.
- Owner experience in the same industry. If you opened a new restaurant after 15 years running another restaurant, some funders will count your industry tenure even though the entity is fresh.
When to wait vs apply now
If you're at 3 months in business, applying now is mostly a waste. Multiple declines create UCC-record activity that other funders see, and a file that's been declined 5 times looks worse than one that's never been touched.
The right move at 3 months: build clean bank statements, no NSFs, growing revenue. Apply at month 6 with three clean statements. Your factor rate at 6 months with a clean file is meaningfully better than your factor rate at 3 months with a clean file, because the time-in-business penalty is steepest below 6.
Alternative products for very new businesses
Three products work better than MCA for businesses under 6 months:
- SBA Microloan — up to $50,000, designed for newer businesses. Slower to fund (45-60 days) but materially cheaper.
- Business credit card — most issuers approve businesses under 1 year if owner credit is strong.
- Equipment financing — collateralized by the equipment, often available even with limited business history if the equipment has resale value.
None of these solve all the problems an MCA solves, but each is a better fit for the specific use case of a brand-new business that doesn't yet have the cash flow history funders need.
Sources & References
- Bank denial and small business credit access figures cited in this piece are derived from the Federal Reserve Small Business Credit Survey. Approval rates for small business credit applications at large banks have ranged from approximately 13%-31% across recent survey years, depending on bank category and reporting period.
- Small business finance landscape and lending program data: SBA Office of Advocacy.
- Merchant cash advance industry standards and disclosure practices: Small Business Finance Association (SBFA).
- Commercial financing disclosure regulations referenced (NY FAIR Act, CA SB 1235/666/362, VA, UT) are summarized from the published statutes; consult counsel for specific compliance application.