When your year is six months long

A lodge outside Sandpoint earns most of its money in two bursts separated by mud. An outfitter in Salmon does a year of business between June and September. A shop in McCall or Ketchum that lives on visitors has a winter, a summer, and two stretches in between where the lights stay on and the till does not move.

None of that is unusual in Idaho and none of it is a weakness. But it is routinely presented to lenders in the one format that hides what is actually going on.

The annual average is the number that misleads

Twelve months of revenue divided by twelve produces a figure that describes no month you have ever had. On a seasonal file it is worse than uninformative, because it makes a business look comfortably mid-sized when in fact it is large for half the year and nearly dormant for the other half.

Underwriters know this. What they do not know, unless you tell them, is whether your quiet months are a season or a decline. Those two look identical on a trailing average and completely different on a chart.

What a lender is actually trying to work out

• Is the pattern stable? Do the peaks land in the same months each year, and have they held up through a bad snow year or a smoky August?
• How deep is the trough, and how long? The question is not what you earn, it is how many months of fixed costs you have to carry before money comes in again.
• Does the business repay inside its own cycle? A seasonal facility is meant to be drawn in the shoulder and cleared at the peak. A lender wants to see that it can be.
• What happens in a short season? Everyone has one eventually. A file that has survived one is far stronger than a file that has not been tested.

Size the facility to the trough, not the revenue

The instinct is to ask for a limit that sounds proportionate to annual sales. That is the wrong anchor. The useful number is the gap: total fixed costs across the quiet months, plus whatever you have to spend before the season to be ready for it — inventory, deposits, hiring, maintenance on equipment that sat idle.

Work that out honestly and ask for it, with the arithmetic attached. A specific request backed by a cash flow projection is taken more seriously than a round number, and it tends to get approved closer to what was asked for.

The structures worth asking for by name

Most seasonal borrowers accept a standard facility because nobody offers them anything else. These exist and are rarely volunteered:

• A revolving line rather than a term loan, so you pay for the money only while you are using it. For a business that borrows in April and repays in September, the difference over a year is substantial.
• A seasonal payment schedule on financed equipment — larger payments in your earning months, smaller or interest-only in the dead ones. This is routinely available and routinely not mentioned.
• An annual clean-up period: some lines require the balance to sit at zero for a stretch each year. For a seasonal business that is usually fine and sometimes a problem, and you want to know which before you sign, not after.
• A covenant tested annually rather than quarterly. A quarterly test measured in March can fail a business that is perfectly healthy on the year.

That last one is the quiet killer. A perfectly ordinary covenant, tested at the wrong moment in your cycle, can put a performing business in technical default on its worst month by design.

The Idaho particulars

Two of them are worth naming because they change the file rather than decorating it.

The first is that a short season is weather, not management, and the evidence for that is usually public. A thin snow year, a fire closure, a river running too low or too high — these are documented, and a lender reading a bad quarter is far more forgiving when the explanation is attached to something they can look up than when it arrives as a sentence from the borrower.

The second is scale. Travel in north central Idaho alone generated about $218 million in spending in 2023, on figures Dean Runyan Associates prepared for Idaho Tourism. Seasonal recreation businesses are not a curiosity here; they are an ordinary sector, and a lender who treats your cycle as exotic is telling you they do not write much of this paper. That is useful information about the lender, not about you.

Apply at the right point in your own year

Underwriting looks hardest at the most recent few months of statements. For a seasonal business that means the month you apply changes the answer materially — the same business, the same year, can look strong in September and marginal in March.

So arrange credit on the way down from a peak, not on the way up from a trough. The facility you want in May is the one to ask for in September, and the cost of being early is a few months of an unused limit. The cost of being late is the answer you get.

When the honest answer is that borrowing is not the fix

A seasonal gap you bridge every year and clear every year is exactly what credit is for. A gap that gets wider each season is something else, and borrowing into it buys quiet months rather than fixing them.

The test is whether the line comes back to zero inside the cycle. If it has not cleared in two years, the business is not seasonal, it is slowly short of capital, and that is a different conversation — about pricing, about cost structure, sometimes about the size of the operation. Worth having before you add a payment to it.