Some lending partners consider newer businesses, but it depends on the partner. With little history to review, partners commonly look more closely at the owners' credit and experience, a business plan, contracts and collateral. Rockstone Lending, a small-business funding broker in Yuma, Arizona, can talk through which options fit, and the Arizona Western College SBDC offers no-fee advising. Call (928) 436-5545.
Why newer businesses face more questions
Lending partners make decisions largely from history: months of bank statements, years of tax returns, a record of paying suppliers and lenders. A new business has little of that, so a partner has less to go on. Partners that consider newer businesses commonly fill the gap by looking more closely at:
- The owners' personal credit and finances
- The owners' experience in the industry
- A business plan and realistic projections
- Signed contracts, purchase orders or early sales
- Collateral, such as the equipment being financed, and any down payment
That usually means more questions, and it can mean different terms than an established business would see. Each partner decides what it needs.
Not yet open, or open but new?
It helps to be clear about which situation you are in.
Not yet open or not yet earning
Most of the funding types on this site are built around a business that already has revenue to show. A merchant cash advance, for example, is a purchase of future sales and depends on sales already flowing. If you haven't opened yet, your own savings, investors, family, and small-loan programs designed for early-stage businesses, such as SBA microloans made through intermediary lenders, are common starting points. The SBDC can help you work through them.
Open, with a short track record
Once the business is operating and bringing in revenue, more options can come into view, depending on the partner. Every month of clean bank statements adds to the history a partner can review.
Your first business loan: what is different
Applying for business funding for the first time differs from borrowing personally in ways that catch owners out:
- The business's records are the application. Partners read business bank statements, tax returns and financial statements, so the business's own history matters more than your pay stubs.
- Your personal side still counts. For a young business, partners commonly review the owners' credit and ask them to sign a personal guarantee.
- The structure is part of the paperwork. An LLC shows its Arizona Corporation Commission filing; a sole proprietor shows licenses and personal returns. See funding for LLCs and sole proprietors.
- Offers are written differently. A business offer may state a total cost instead of an APR, and may collect weekly or daily. Read our questions to ask before signing and the funding glossary before your first offer arrives.
Which options can fit an early-stage business
Whether any of these is available to your business depends on the lending partner. In general terms:
- Equipment financing: the equipment usually secures the financing, which gives the partner something concrete to evaluate alongside the business. A detailed vendor quote and a down payment, if required, are part of the picture.
- Working capital and lines of credit: these lean on cash flow, so partners generally want to see some revenue history first.
- Term loans: for planned investments, partners commonly look for a track record, financial statements and sometimes collateral.
- Merchant cash advances: not a loan, and dependent on existing sales. The total cost can be high, which weighs especially heavily on a young business's cash flow.
For SBA programs, which Rockstone Lending does not arrange, see SBA loans vs. other options.
What to prepare
- Registration and licensing: your Arizona Corporation Commission filing if you are an LLC or corporation, any Arizona TPT license your activity requires, and your city business license. Our Arizona step-by-step guide explains each one.
- A business bank account from day one: keeping business money separate builds the bank-statement history partners review.
- Bookkeeping: a current profit and loss statement, even a simple one.
- A short business plan: what you sell, to whom, what it costs to operate, and realistic projections.
- Your experience: a summary of the owners' background in the industry.
- Personal financial information: your recent personal tax returns and an understanding of your personal credit.
- Purpose documents: equipment quotes, a lease for your space, contracts or purchase orders.
The documents checklist explains what partners commonly look for in each record.
Free help for new businesses in Yuma County
- Arizona Western College SBDC: the Small Business Development Center at 1351 S Redondo Center Dr. in Yuma, (928) 317-6151, offers no-fee advising, including on financing and capital needs for start-up and growth, financial analysis and budgeting. It states that it cannot provide legal or tax assistance.
- SBA: the SBA describes its loan programs, including microloans provided through intermediary lenders. Yuma County is served by the SBA Arizona District Office in Phoenix.
- Arizona Corporation Commission: the 10 Steps to Starting a Business in Arizona guide covers formation and registrations.
- City economic development offices: the City of San Luis says its economic development staff help businesses navigate the requirements and procedures to establish and grow. The City of Yuma also has an economic development office.
Rockstone Lending does not offer grants and is not affiliated with any of these organizations.
Questions to ask yourself before taking on funding
- Will the money produce revenue, or cut costs, by more than it costs to repay?
- Do the payment amount and frequency fit how money actually comes into the business? Daily or weekly debits feel very different from one monthly payment.
- If you sign a personal guarantee, what happens to you personally if the business struggles?
- Is there a smaller first step, such as financing one key piece of equipment, that builds a track record?
How Rockstone Lending helps
Rockstone Lending connects you with lending partners; partners make credit decisions and set rates and terms. If your business is new, tell us how long you have been operating, what you are bringing in and what the money is for. We'll be straight about which options are worth exploring and, where a partner considers businesses at your stage, put your request in front of it. There is no guarantee of approval. See how the process works or start an application.
By Rockstone Lending · Updated
