Not the End of Main Street

While many in the mergers and acquisitions markets may be lamenting the lack of activity on Wall Street due to the credit crunch, there are still signs of life on Main Street.

According to one lower middle market investment bank, Green Manning & Bunch, both strategic and private equity buyers are actively acquiring businesses.

Why?

Strategic buyers are using the cash on their balance sheets and thus are not constrained by the lending limits of commercial banks. Private equity continues to raise record amounts of capital (on pace to exceed last year's record amount of more than $300 billion), which they need to put to use.

The companies being acquired have solid profit margins, prospects for growth, protected market niches and quality management teams.

Need help finding the right lender for an acquisition of a lower, middle market business? Read "Matchmaking for Business Loans" and give me a call!

Tags : Mergers and acquisitions , M&A , Green Manning & Bunch , credit crunch

SBA - Loans Decrease for Fiscal Year 08

At the beginning of the credit crunch in the summer of 2007, I wrote a posting, "Small Biz Credit Crunch: Will SBA Save the Day?".

With the release of its full fiscal year 2008 numbers, I believe the answer is in and there's really no surprise.

According to The Coleman Report, both SBA loan volume and SBA loan dollars were significantly lower in fiscal year 2008 for both the SBA's 7a and 504 loan programs.

In the 7(a) program, SBA loan activity for fiscal year 2007 totaled 99,606 loans for approximately $14. 3 billion. SBA loan activity for fiscal year 2008 totaled 69,434 loans for almost $12.7 billion. That's a reduction of 30,171, or 30.3 percent, in the total number of loans, and a reduction of $1.6 billion, or 11.3 percent in dollars loaned to small business.

In the 504 program, SBA loan activity for fiscal year 2007 totaled 10,669 loans for approximately $6.3 billion. SBA loan activity for fiscal year 2008 totaled 8,883 loans for almost $5.3 billion. That's a reduction of 1,786, or 16.7 percent, in the total number of loans, and a reduction of just over $1 billion, or 16.2 percent in dollars loaned to small business.

According to SBA director of financial assistance, Grady Hedgespeth, the lending decline reflects both banks' tightened credit standards and less demand from business owners. In general, larger, more mature businesses still have a healthy demand for loans than earlier stage, smaller businesses.

Need help finding the right SBA lender or telling your story the right way for your California business? Read "Matchmaking for Business Loans" and give me a call!

Tags : credit crunch , business loans , SBA loans

California Cash Flow Problems

Cash flow for the state of California is getting tight as the state is having difficulty accessing the credit markets. California may seek a short term loan from the US Treasury in the amount of $7 billion!

If your company is a vendor to the state of California or its counties, cities and school districts, you need to watch your receivables like a hawk. There's a good chance you'll see your days sales outstanding increasing over the coming weeks until the credit markets thaw out.

If your business has direct (or indirect) significant exposure to California government entities and affiliates, you may want to provide your own lender a heads up. If California related accounts receivable pile up, your business could run into either concentration issues or cross aging issues resulting in a reduction in your own lines of credit.

If you don't have a line of credit, you might find that you need one. Factoring of accounts receivable could be a working capital solution that can be arranged within days.

Need help finding the right lender or telling your story the right way for your California business? Read "Matchmaking for Business Loans" and give me a call!

Tags : credit crunch , accounts receivable , lines of credit , factoring , California

CFOs Worry About Access to Capital

The credit crisis is deepening and the uncertainty of a congressional bailout package has both the financial markets and CFO's alike worried about the continued impact.

According to a new survey by CFO Research Services, 61 percent of CFOs surveyed are concerned about their company's access to day-to-day financing. Even more - 65 percent, are worried about access to long term credit.

Many of the lenders with whom I speak say they are willing and able to lend, but the proof is in the pudding. Here's what I have personally experienced myself in the last few days.

• Closed a $250 thousand SBA loan for a manufacturer of food products.
• Closed a $500 thousand factoring deal for an importer of meat products.
• Received approval for a $500 thousand equipment financing for new trucks.
• Obtained a bank proposal on behalf of a consumer electronic products company for a $1.5 million working capital secured by accounts receivable and inventory. Formal due diligence starts next week.
• Submitted a $6 million proposal for Fannie Mae financing of a recently completed and fully leased, multi-family real estate property.

Debt financing is still flowing into the markets on a selective basis provided you can offer the right collateral to lenders. Rates are a bit higher reflecting lender perception of risk and the lack of liquidity amongst lenders.

Need help finding the right lender or telling your story the right way for your California business? Read "Matchmaking for Business Loans" and give me a call!

Tags : credit crunch , accounts receivable , lines of credit , factoring , SBA loans , bridge loans , real estate