When purchasing an existing business, lenders typically require financial information for the past how many years?

When purchasing an existing business, lenders typically require financial information for the past 3-5 years. This timeframe allows lenders to gain a comprehensive understanding of the business's financial health and performance over several years, which is crucial for making informed lending decisions.

The rationale behind this requirement is that a minimum of three years provides a clearer picture of the business's trends and stability. It reflects various economic conditions, allowing lenders to assess whether the business can generate consistent cash flow and manage expenses effectively. Additionally, a longer timeframe helps to identify any anomalies or unique situations that might have occurred in the short term, offering a more complete understanding of the business’s risk profile.

In summary, requiring financial records for the past 3-5 years ensures that lenders have enough data to evaluate a potential loan’s risk and the buyer's capacity to continue the business's success.