For Harvard Square's businesses, Christmas comes twice a year.

The week of reunions and Commencement is the second busiest of the year for most of the restaurants, stores, and hotels near the University, just behind Christmas week, which traditionally heralds the biggest buying spree across the nation.

The thousands of people coming for reunion week and to watch their children get a sheepskin give the Square a "two-week extravaganza," says Sally Alcorn, director of the Harvard Square Business Association.

Area hotels are almost completely booked and restaurants struggle to accomodate the huge families celebrating junior's accomplishments. Upstairs at the Pudding, a restaurant on Holyoke St. replaced its standard square tables for four with large round tables to keep up with the crowds says manager Mary Catherine Diebel.

The largest business in the Square The Harvard Coop has a special part to play in the Commencement festivities. The Coop passes out about 4000 caps and growns during the week, according to president James Argeros.

That number, however, is slightly higher than the member of people who reserved outfits by the mid-May deadline. "I'm embrassed to sayE> how many people come in here the day of Commencement" to plead for left over growns, Argeros says.

The Coop orders extras, but a basketball player might end up with a gown meant for a jockey. The last-minute process is complicated by the little crow's foot emblem on Harvard's gowns, unlike any other University's prevents students from running down to M.I.T. and grabbing a gown.

With all the headaches involved. The Coop doesn't make much profit from academy regalia, but it serves as distributor as a service to the community, Argeros says.

Attempting to capitalize on the occasion. The Coop will set up table to try to attract browsing alumni to renew their Coop memberships. The department store also expects a large business from seniors seizing their last chance to buy Harvard T-shirt.

The Coop congratulate departing seniors with graduation gift of its own, giving each student a 20 percent discount coupon good for any thing in the store and a Coop notepad when they pick up their caps and gowns. A congratulatory letter from Argeros also accompanies these gifts.

The liquor stores don't do quite the business that would be expected during a week of almost continuous. The University "keeps them so well entertained" that the alums and senior don't need to buy too much of their own liquor, says Blake Allison of A Wine for A Reasons.

But the last several weeks have been busier than normal for champagne sales with people buying presents for departing friends and professors, Allison says.

One of the largest beneficiaries of the week's festivities is Ferranti-Dege photo store. On the morning of Commencement, the store opens at 7:30 a.m. with extra sales help on hand and cash registers running to help the people waiting in line who forgot their firm or couldn't resist using it all up too quickly.

This week is "as important as Christmas," says Charles Ferranti.

Ice cream is a traditional Cambridge favorite and the local stores are even busier than during a usual June week. The children of reunion participants are brought into Harrell's 20 or 30 at a time by their counselors, says Jessica Leahy, the ice cream parlor's owner Herrell's too, is hiring extra scoopers to keep the kids from waiting too long.

The stores in the new Charles Square mall are hoping that the crowds will gravitate towards the fancy shopping area. Pedestrian traffic in the area has been show so far and store managers are hoping that good weather, a lot of visitors, and a full Charles Hotel will boost their business.

The Charles Hotel at Harvard Square of the newest beneficiaries of the deep pocketbooks of proud parents. The management expects all 300 rooms to be full and is hosting a number of reunion events in the hotel ballrooms.

Bob pope, director of marketing for the luxury hotel, says its proximity to Harvard Yard has helped make The Charles a popular place to stay. The hotel already has a waiting list for rooms for Commencement 1986. The front desk has received calls from parents of newly admitted member of the Class of '89 requesting reservations for graduation in four and a half years.

One of the business people with the most personal knowledge of Commencement is Paul Corcoran '54 owner of Corcoran's and The Harvard Shop. He's had one of his three children enrolled as a student for the last six year and consulted his checkbook records to come up with the slogan for the T-shirt that he expects to be a best seller.

The front says, "This shirt cost my family $50,719," and the back says proudly. "And I'm worth every penny of it.