At the time of writing, we are closing in on the end of November, 2010.
In the world of business financing (which may be similar to a lot of other industries), everything is going to start to slowly grind to a halt over the next 3 weeks and by the middle of December nothing much is going to happen until the second week of January in the new year.
For businesses that have applications being worked on for a while already, this could be a good thing as lenders work to clean out their active files, especially those on a calendar year end. Files that have been dragging along for several months now may actually get some action as there is a last push to lower the pile of outstanding apps before the holiday season commences.
If you’re just starting the process of seeking additional business financing in the form of debt financing or equity investment, be prepared for anything you start now to drag over into the new year and take awhile to not only be seriously looked at, but completed and funded if you get that far with your target lender.
At the same time, there is going to be some opportunity to secure credit in the short term, especially with lenders that have not met their lending targets. This is the time of year where credit policies will either tighten up or loosen off a bit, depending on where a lender with a fiscal year end is with their budget and forecast. Like any other business, these folks work hard for their bonuses, and if there is a way to hit those numbers within their financing requirements, they are going to be a bit more motivated to pull something off now than at other times of the year.
The flip side is the debt financing entities that have made their targets already and are only considering new borrowing opportunities in the last quarter than will reduce the overall level of risk in their portfolios.
The challenge for the business owner is trying to figure out who is lending and who isn’t right now. Its a bit of a crap shoot to say the least without any real outward signs that you can pick up on from the street.
Even if a debt financing source or equity investor is willing to get something done before everything shuts down, there are all the other parties to the process (appraisers, lawyers, accountants, etc.) that may also be hard to get work out of at this time of year.
My advice would be to avoid the inevitable frustration and get ready for a fresh run at the market in early January. If you’ve got a cash crunch on your hands right now, see what you can do to delay the impact so that you’re not dependent on something getting done quickly.
Outside of the end of August, the Christmas and year end period tends to be the most difficult time to get any business financing in place, so try to avoid the process right now if at all possible.