A total of 692 small and mid-sized businesses have sold in California so far this month. The companies that changed hands included a full range of industries, such as food service, auto related, retail, distribution and manufacturing.
While the pace of closed escrows early in the month was on track to match or exceed the sales figures for last February, when 1,002 business sales were recorded, the activity slowed the past few days. This is often what happens directly prior to a three- day weekend when buyers, sellers and business intermediaries take time off.
Business transactions in some large California counties are closing at a higher rate this month than during the same period last year. A total of 47 sales of small businesses have been recorded in Alameda County since February 1, compared to 46 completed deals in all of February last year. The count of 20 Sacramento County businesses changing hands to date this month also exceeds, by one sale, the total registered during all of last February. And as of last Friday, the number of deals closed in Riverside County this month reached 35, well ahead of the 20 sales total in the county for February 2010.
A key indicator of business sales activity expected in the months ahead is the volume of
SBA loan pre-qualifications, along with the availability of money needed to help fund transactions. A positive sign is the SBA report showing an increase in lending activity in California this fiscal year (2011, which began last October 1.) The agency’s recently released figures for California show a total of 3,106 approvals of 7(a) and 504 loan program requests this fiscal year, through February 11, with a total value of $1.99 billion. That compares favorably to approval rates for all months of the 2010 Fiscal Year, when SBA loan program approvals in California totaled 6,326, with a value of $2.8 billion.
Also encouraging is that SBA preferred lenders report an increase in the number of buyers, and even sellers lining up to get preliminary approval for some of the funds needed to complete their deals in coming months. It’s likely that lenders will continue receiving more applications for the SBA 7(a) and 504 loan programs well into 2011. The extent to which lenders are willing to participate in the market, however, will be dictated by the strength of the economic recovery.
But negative news comes from Washington DC, as the Federal Government prepares to cut back on the funds made available to the SBA to support its lending, training and other programs. The 2012 Federal budget has yet to be voted on in Congress, and after approval won’t take effect until October. But it’s clear that one consequence of the reduced budget next fiscal year will be the end of the incentive programs the agency instituted to help improve lending activity over the past two years. California’s small business advocates, entrepreneurs, business brokers and agents are hoping measures taken at the Federal level to spur the economy will have the desired effect, and that lenders will be more willing to make money available for small business purchases.
About The Author: Peter Siegel, MBA is the Founder of www.BizBen.com (established 1994 - 7000+ California businesses for sale, 200 new listings daily) and the Director of the BizBen Network (16,000 business buyers, 4,000 small business owners, 1,800 California business brokers & agents). He consults daily with business buyers, business owners, small business advisors, business brokers and agents on selling and buying California small businesses. He is also the author of three books on the topic of how to buy and sell California small to mid-sized companies. For a FREE consultation on the best way to buy or sell a California business, phone Peter Siegel direct at 866-270-6278.
Posted on February 22, 2011 | 
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