Guide

You just bought a business. Does its history count toward funding, or are you a startup?

It depends on how you bought it. If you bought the company itself — the entity, its bank account, its EIN — the deposit history continues and funders read it as yours, usually after a few months under your ownership. If you bought the assets into a new entity with a new account, the funder sees a new business with a few months of deposits, and the seller's years mostly do not transfer. Either way, send the seller's statements; they explain the business even when they do not count.

Stock purchase versus asset purchase, from a funder's chair

Buy the entity and its bank account continues: the statements run unbroken through the sale, the deposits are the same customers paying the same way, and a revenue-based funder reads the business as the business it always was. Most want to see a few months under the new owner before they fund, to confirm the customers stayed, and then the full history counts.

Buy the assets into a new LLC with a new account: the funder's clock starts at your first deposit. You have the customers, the equipment and the name, and a three-month-old bank account. Under six months you are read as a startup, whatever the sign on the door says. The seller's statements help the underwriter understand the business; they do not usually move the date.

What helps in the asset-purchase case

The purchase agreement, the seller's last twelve months of statements, and your own since closing, side by side, showing the deposits continued at the same level. A funder that can see the same $60,000 a month before and after the sale will sometimes credit the continuity even on a new account — not all will, but the ones that do are the ones to apply to. Equipment bought in the sale can be refinanced as equipment, which needs no history. And a seller note, if you have one, is a reason to keep the first advance small.

What each underwriter weighs

A BANKA REVENUE-BASED FUNDERPERSONAL CREDIT SCOREheavysomeCOLLATERAL TO PLEDGEheavynot looked atTWO YEARS OF TAX RETURNSheavynot looked atTIME IN BUSINESSheavysomeMONTHLY BANK DEPOSITSsomeheavyDEPOSIT CONSISTENCYnot looked atheavyINDUSTRY AND STATEsomeheavy
The same business, read two different ways. A bank decision is built on credit, collateral and filed accounts; a revenue-based funder builds it on the money moving through your account. That is the whole reason a bank decline says very little about whether you can be funded.

The trap in the first year

A business changes hands, a few customers leave, the new owner takes an advance sized to the old deposits, and the daily debit is set for a business that is now smaller. Apply on your own months, not the seller's, and size the ask to what you are actually depositing. The seller's history is context. Your statements are the application.

Sources

Related questions.

Can I use the seller's tax returns?
For a bank or SBA lender assessing the acquisition, yes, they are central. For a revenue-based funder after the fact, they are context; the deposits under your ownership are what get underwritten.
Does keeping the seller's EIN and account help?
Substantially, for funding purposes. It also carries the seller's liabilities and history, good and bad, which is why buyers' lawyers often prefer an asset purchase. Ask both before closing; the structure decides the funding for a year.
The seller had a cash advance. Am I responsible?
If you bought the entity, its obligations came with it unless the agreement says otherwise, and the funder's UCC filing may still be on the assets. If you bought the assets, check for liens before closing. Either way, find out before a funder does.

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