Small Business Outlook for Expansion

Confidence is growing as we enter the new year. According to the NFIB Research Foundation, the small business outlook for expansion survey has shown a dramatic surge. In December 2016, 23% of small businesses surveyed answered affirmatively to the question “are the next three months a good time to expand.” This is up nearly 3- fold from the level that answered affirmatively in December 2015. The trend was sustained in January 2017 with 25% of those surveyed responding affirmatively vs. 10% in January 2015. The small business sector appears unshackled and ready to flex their expansion muscles.

In the acquisition financing arena, capital availability is destiny as companies require reliable access to capital to grow over the long term. Unforeseen capital needs usually arise when acquirers least expect it. This can cause some concern for the acquisition financing provider, especially when covenants tighten up and that working capital availability is utilized faster than expected.

Mezzanine debt borrowing is usually a straightforward activity that many companies use for funding of transitional growth. Mezzanine debt lenders are highly transparent about their due diligence approach and their post-closing loan management making it easy for companies to engage with.

Elections have consequences and positive ones at that for the acquisition financing middle market. While much media attention is paid to the direction of the yield curve and the Fed’s likely rate cuts, scant attention is paid to the more important drivers of the acquisition financing market – business psychology and regulatory climate.

Small Business Outlook for Expansion

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