I want to write about my direct experience arranging financing for small business for over two decades and how access to capital differed from one bear market to the next – with a focus on comparing ‘The Great Recession’ of 2009 with the low shaky Oil market today. Let’s start with a few common elements:
- Oil went from over $100 down to $40 in a short period of time.
- Natural Gas hit a low and never came back.
- Ritchie Brothers Auctions had record sales in Nisku.
- Big oil laid off thousands of employees.
- Housing prices dropped, new home starts died, etc… lots in common.
There is however one massive difference between 09 and today: In 2009 CREDIT DRIED UP, there was no liquidity. Major projects lost funding overnight, inter bank loans halted, bond rates went through the roof – even the mighty fortress GE Capital nearly stopped lending and more than doubled it’s lending rate when it did squeak out a few dollars. In fact the average employed person with good credit could have obtained a small bank loan cheaper than a fortune 100 company could borrow on the markets – it was absolutely bizarre. Contrast this to today, even with low oil and all the economic disruption, there are still massive amounts of capital available and ready to be deployed – it simply isn’t from the same lenders and at the same rates and terms. Some lenders are large multi nationals while many others are smaller boutique style providers. In fact the capital markets are quite entrepreneurial with more money coming from western sources than ever before.
Leases, Sale & Leasebacks, Loans, Refinancing, Factoring, Bridge & Interim Financing, Vendor take back financing are all products available at different rates and structure’s to help businesses get through this cycle and be prepared for when it comes back.
If you own a business and have leverage you need to navigate with the right lending partners; whether that’s talking to your existing ones to make sure you are on the same page or researching other options available to make sure you have more control over the direction of the business. Combine your own business acumen with the advice of a good accountant, business peers and the experience of a professional financing broker and there is a good chance you will make good things happen.
Money has to move, get some moving back in your direction.