3 Things You Should Know About Small Business: Jan. 8

NEW YORK ( TheStreet) -- What's happening in small business today?

1. Small firm M&A jumps in December. Business brokers ended 2012 on a high note as small-business owners across the country rushed to complete the sale of their businesses before the end of the year. Completed transactions of businesses for sale "spiked significantly" in the final three weeks of 2012 as the fiscal cliff deadline approached and higher taxes loomed, according to a report by BizBuySell.com, the Internet's largest business-for-sale marketplace.

The number of closed small-business transactions spiked more than 40% in the final three weeks of the year compared to the sales pace during the same period in the prior year, BizBuySell.com says.

"The dramatic bump in closed transactions over the final three weeks of 2012 really shows the effect that tax policy can have on business owners' motivation. Given the eight-plus months it typically takes to sell a business, the end-of-year increase comes from owners who put their business on the market months ago pushing to ink deals before the New Year," says Curtis Kroeker, BizBuySell.com's general manager.

The trend of improving small-business financials continued in 2012, laying a foundation for a more robust business-for-sale market in 2013, BizBuySell.com says. As small businesses grew healthier over the year, the median sale price rose 3.2% to $160,000 from $155,000.

"We've seen small-business financials improve consistently for a few years now, yet buyers aren't yet flocking to the market," Kroeker said. "With more owners finally planning their exits, this results in a buyer's market keeping sales multiples low. Accordingly, brokers have indicated that it's more important than ever for sellers to provide seller financing to get deals done."

2. Alternative lending will hit its stride in 2013. For companies that are clearly creditworthy, the gates finally opened in 2012 for capital access. Banks are now eagerly hunting for good credit borrowers, but the problem is most small businesses don't meet banks' lending criteria. As a result, a large crop of alternative lenders, from factoring to merchant-cash lenders, have exploded since the recession, ready to supply money to the rest of the small businesses. Even with the high rates these lenders charge, the alternative lending industry will continue strong growth in 2013, according to MultiFunding's Ami Kassar in his New York Times blog.

"These lenders are extremely entrepreneurial and are leaving the banks behind with their speed and use of technology. Many are backed by premier investment banks and Silicon Valley venture capital powerhouses -- investors who understand that entrepreneurs and small-business owners are throwing up their hands in frustration over how long it can take to get a loan from a bank, especially if the loan is backed by the SBA," Kassar writes.

On a positive note, there are indications that the price of alternative lending may be coming down as the industry competition heats up.

"The largest banks continue to tout their small-business lending records, but the numbers they provide to back this up are less than convincing," he writes. "We regularly speak with small-business development officers at these banks who are ready to throw up their hands in frustration at their inability to get their clients the help they need. My expectation is that this will not change much in 2013, as the bigger banks simply aren't equipped to handle small-business lending and Washington puts little pressure on them to figure it out."

3. What to know about generators. Failure to plan for natural disasters could result in loss of business, whether it's temporary or long-term. When there's a power outage, like the one that lasted several weeks on Long Island after Hurricane Sandy, having a generator on site can mitigate some of the damage to a small business. TriplePundit.com offers some basic information small-business owners should consider when determining whether to purchase a generator.

Safety should be a priority. Portable generators should never be placed indoors when in operation, the article says.

Noise is an unfortunate byproduct of generator use, with some models being particularly loud. Automatic standby generators are generally quieter than portable models, the article says.

-- Written by Laurie Kulikowski in New York.

To contact Laurie Kulikowski, send an email to: Laurie.Kulikowski@thestreet.com.

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Disclosure: TheStreet's editorial policy prohibits staff editors, reporters and analysts from holding positions in any individual stocks.

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