Electrical Contractor Case Study

19:52 08 December in Case Studies
15

Case Study Electrical Contracting Firm: Single Invoice Factoring

COMPANY CHALLENGES

Following the devastating effects of Hurricane Sandy, the company experienced a market-demand extension of payment terms. As a result of the slowdown in cash flow there was a delay in payment to suppliers, missed bid opportunities, and the company couldn’t fund payroll or meet increased demands. The company was put into financial distress when they were turned down by local banks and their recommended financiers. Due to this, the company couldn’t meet other loan covenants, experienced debt hangovers, strict credit limits and balance sheet discrepancies.

BACKGROUND

Locally owned and operated electrical contracting firm in New York City

• Clients: City of New York, NYS Board of Education, Mass Transit 3

• Provided a Single Invoice Factoring Facility

• Electrical Contractor Used Capstones Financial Statement to demonstrate financial capability and increased his bidding opportunities and wins

• Capstone factored the invoices and paid suppliers and subcontractors directly under funds control

PROGRESS & FUTURE OUTLOOK

Increased bonding value to $10 Million with retained earnings • Increased sales by 2.5 times in 2013 • Won an additional 10 SCA contracts for

2014 CAPSTONE’S SOLUTION LEARN MORE TODAY

Call: 212-755-3636

 

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Painting Subcontractor Case Study

19:46 08 December in Case Studies
7

Case Study Painting Subcontractor: Single Invoice Factoring

COMPANY CHALLENGES

Because of the financial crisis, this company experienced hangover effects, including an increase in delayed payments from General Contractors, a lack of working capital to buy supplies and pay vendors, missed bid opportunities and more. The growth was outpacing cash flow and larger payroll commitments weren’t met, increasing the company’s number of unpaid invoices.

BACKGROUND

Painting subcontractor located in the Yucca Valley, California

• In business for over 42 years

• Clients: Large commercial and apartment complex construction firms

• Relationship with Capstone for over 2 years

• Provided a Single Invoice Factoring Facility to increase working capital

• Total volume factored invoices approx. $2.5 million

• Factored close to 100 invoices

PROGRESS & FUTURE OUTLOOK

Increased business volume by 15% in 2014

• Contract backlog of $300,000

• Expansion into other verticals of the painting industry including custom homes and homeowner associations (HOAs)

• Firm can now focus on planning and performance of contracts while bidding on new work opportunities

CAPSTONE’S SOLUTION LEARN MORE TODAY

Call: 212-755-3636

 

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Long Island Waterways FEMA Contract Case Study Download

19:41 08 December in Case Studies
12

Long Island Waterway Debris Removal Firm: Single Invoice Factoring

COMPANY CHALLENGES

The process of collecting the debris was complex because the debris first had to be identified. A sonar ship was hired by our client to identify all of the debris and then equipment had to be deployed to remove it weather permitting. The debris consisted of simple materials like wood to complex material like steel ships and everything in between like patio furniture, cars, washing machines, dryers, other home appliances, and sheds. The client, had they elect to self-finance this project, would have required over $3,000,000 of working capital during the period that the first round of invoices were issued. The New York municipal agency generally takes extended terms prior to issuing payment. If the client lacked the $3,000,000 working capital, each subcontractor and material vendor would also be required to support the project for an extended period of time expending his or her own resources without payment from our client.

BACKGROUND

In 2013 the Tri-State are was devastated by Super Storm Sandy

• Long Island waterways were littered with storm debris, requiring extensive cleanup solutions

• Capstone came up with a factoring solution to meet our client’s working capital needs

• Implement a swift course of action for accelerated cash flow

PROGRESS & FUTURE OUTLOOK

Because of the client’s ability to demonstrate to the NY municipal agency that it could finance itself and perform to a high standard under this contract, the client has been awarded a subsequent $8,000,000 contract.

CAPSTONE’S SOLUTION

LEARN MORE TODAY

Call: 212-755-3636

 

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Manufacturing Still Matters in the U.S.

00:29 06 December in Blog
120
Manufacturing is an important facet of the U.S. economy, despite the increase in imported goods steady elimination of factory jobs here in the states. With private sector manufacturing jobs representing only 10% of the workforce now versus 25% during the 1980s, it would seem the private sector wouldn’t provide much stamina.  However, this disregards those who rely on manufacturing, such as truck drivers and forklift operators. 
 
The yardstick that measures the robustness of manufacturing includes the following indicators:
  •  Final sales of U.S. made goods
  •  Ultimate price garnered by domestically produced goods (this accounts for approximately one-third of gross domestic product)

GDP tends to be most influenced by the goods sector, which includes areas like mining that causes fluctuation of the GDP based on whether times are good or bad.

 
The news appears to be good for U.S. manufacturers.  The institute for Supply Management’s index saw a jump in manufacturing in the month of October to 59 from 56.6 in September. This places manufacturing above 50, matching its three-year high. 
 
While financial information provided by Markit shows manufacturing’s gains easing up, the Federal Reserve Bank of New York and Philadelphia shows an uptick in activity.  Additionally, estimates by economists show increases in the last quarter of 2014.  Clearly manufacturing in the U.S. appears to be holding strong, at least for a while.
 
Thanks to a sharp decline in oil, costs of products will decrease, and a stronger dollar will make products less competitive globally.   Further, the fall in oil prices will likewise bolster the cost of good production here in the U.S.
 
Additionally, the increase in factory activity may reflect a healthier stage in the economy as hiring goes up allowing for more consumer spending. This would also encourage companies to step up production in turn necessitating additional hiring.  The good news in manufacturing could spell a very promising 2015. 
 
While manufacturing here in the U.S. seems to be picking up speed, there are still many small to mid-sized business out there in need of additional working capital to make payroll or expand operations.  Capstone Capital Group, LLC understands the difficulty of obtaining traditional business financing and accordingly offers Single Invoice Factoring (“Spot Factoring”) as a solution.   For years, we have helped organizations get the immediate cash they needed without the typical red tape that most banks require.  For more information about Capstone and our Single Invoice and Purchase order Factoring, give us a call today at (347) 821-3400 and speak to a representative.

Bye-Bye, Branches-Branch Closures Signal Big Changes in Banking Services

15:23 26 November in Blog
140
As banking continues to go through changes and services become more electronic-based, bank branches are slowly falling off the map. Just under 2,600 bank branches have closed in 2014, while a mere 1,137 have opened. SNL Financial reported that 2013 saw a net loss of 1,487 branches while 2014 has seen a loss of 1,462 so far. In total, there are 94,752 branches in the US, leveling out to an overall 1.5% decline.
 
Acquisitions, mergers, e-banking services, regulation and many other factors have contributed to the slow decline of brick and mortar branches.
 
The following top five banks that have seen closures this past year:
 
·         Bank of America (148 closures)
·         SunTrust (60)
·         BNP Paribas (47)
·         KeyCorp (45)
·         JP Morgan Chase (40)
 
It’s clearly noticeable that Bank of America has seen the highest number of brick and mortar branch closings. In the 3rd quarter alone, the company saw 41 closings. Bank of America is currently the second largest bank determined by deposits. It ranks third for branch numbers in the US. As of June 30, 2014, this number was 5,099.
 
As closures continue to sprout up across the board in virtually all areas of the US, many fear that the impact on neighborhoods and communities will be a significant one. The National Community Reinvestment Coalition stated in a report the “vibrancy of communities” relies heavily on the “critical services” that bank branches provide. The group noted that predatory lenders are just one of the many problems that arise in areas where bank branches close their doors.
 
Others believe that bank branch closings will only see a temporary decline. Banking analysts are confident that things will smooth over once the yield curve begins to expand, and the Federal Reserve regulates interest rate policy.
 
In terms of regional closings, SNL Financial reported that Chicago has seen the largest hit with 125 losses. Washington, D.C., saw the second most amount of closings, ranking in at 39.
Illinois, in terms of state closings, saw the largest loss. Ranked behind Illinois were Pennsylvania with 92 losses, Ohio (84), Michigan (75), and New York (70). In fact, only six states reported positive gains in the past year. Nebraska saw the most openings which totaled to nine.
 
While most banking services can be conducted online, there are still some things that community bank branches do which serve a purpose. Regardless of technology and mergers rendering a select few branches useless, the rest will continue to thrive and serve communities.
 
The banking industry has gone through many changes these past few years and continues to do so.  Services that banks used to offer have changed significantly and have even been eliminated altogether.  With regulators imposing ever stricter rules on credit, businesses are finding it more and more difficult to obtain loans they truly need.  Capstone Capital Group, LLC has the answer.  Capstone has eliminated the bank red tape by offering small to mid-sized business Single Invoice Factoring (“Spot Factoring”).   Businesses can now get the immediate cash they need in exchange for working capital from Capstone Capital Group.  For more information on Capstone’s Single Invoice Factoring call us today at (347) 821-3400.  

Here Comes the Surcharge: Big Banks Dealt another Regulatory Blow by the Feds

21:09 20 November in Blog
140
Here Comes the Surcharge: Big Banks Dealt another Regulatory Blow by the Feds
In another effort to reduce the risk of “too big to fail” banks and financial institutions, the Federal Reserve plans to hit the largest of U.S. banks with an expensive new regulation.  Accordingly, Federal regulators intend to impose a surcharge on the largest U.S. banks requiring them to maintain a fatter cushion in order to protect them from potential losses. The version of the surcharge proposed by the Feds will be tougher than the one international regulators agreed to. 
Additionally, when determining the size of the new capital surcharge, the Fed will penalize those banks that heavily rely on volatile forms of short term fund, such as overnight loans.  By implementing these measures, some of the larger U.S. banks may need to increase their capital cushions beyond those of their international rivals.  The move has led some to wonder if Washington is putting U.S. banks at a competitive disadvantage.  The exact amount of capital needed by big banks has yet to be determined.
Banks have added substantial capital since the financial crisis and, at present, are currently subject to many new regulations. The exact range for their capital surcharge hasn’t been settled on by the Fed.  However, they are considering a range that extends a few percentage points higher than the top range of 2.5% of risk-weighted assets imposed by international regulators.  It’s quite possible U.S. banks could face surcharges as high as 4.5%.
According to regulators, by raising the capital requirement amounts for firms that pose the greatest risk to the U.S. financial stability, the Fed intends to improve these firm’s resiliency.  What is at issue is the requirement that the world’s largest financial institutions hold an additional layer of padding in case of another financial crisis.  While the details of the Fed’s proposal on specific banks are not yet clear, firms with large broker-dealer operations, like Goldman Sachs Group, could potentially face increased capital charges under the Fed’s plan.  This is because such firms rely on large short-term loans to finance client activities.
Firms like Goldman Sachs and Morgan Stanley count such short-term liabilities as more than one-third of their liabilities. Both firms have indicated in regulatory filings that they are maintaining enough capital to meet international surcharge requirements.  The U.S.’ plan to enact a higher surcharge shows the latest move by Washington to boost the banking system by requiring Wall Street to protect themselves against losses. As a bonus, regulators adopted additional rules requiring banks to hold safe assets that they can sell for cash if they need to. 
It is not clear how many U.S. firms will be required to raise additional capital to comply with the United States’ tougher surcharge requirements, and some of the larger banks declined to comment. However, it is clear that larger U.S. banks will argue the surcharge is putting them at a competitive disadvantage. 
As the Feds continue to further regulate the banking industry, loans to small and midsized businesses become increasingly more difficult to obtain.   Capstone Capital Group, LLC can assist you.  We have been assisting small to mid-sized businesses in obtaining the required working capital they need to grow and thrive, and have been doing it for many years.
Capstone specializes in Single Invoice Factoring (“Spot Factoring”) for businesses in need of immediate cash. For more information about our Spot Factoring product and how we can help your business grow, contact us today at (212) 755-3636, or visit our website at www.capstonetrade.com.
 

The Fed’s Answer to U.S. Economic Growth: Let Them Have Loans-With Little to No Risk

15:27 17 November in Blog
140
In a recent move by Washington to stunt economic growth, Washington agreed to a two-step strategy.  The first step involves Fannie Mae bringing back low and no money down mortgages. The second step would be to discourage business loans.
 
A few weeks ago, Mel Watts, the Director of the Federal Housing Finance Agency, discussed plans to bring back low down payment options for government backed mortgage loans.  In some cases, allowing down payments as low as 3%.  Mr. Watts also suggested other initiatives to expand credit that critics fear may lead to another real estate boom and bust scenario. 
 
Additionally, the banking regulators and the Federal Reserve just approved new rules for “private” mortgage-backed securities.  The proposal wouldn’t require underlying loans to have any down payment at all.  In an ironic twist, the 2010 Dodd-Frank law was enacted to ensure that everyone has “skin in the game”.  However, with the new rules enacted by regulators, it would seem no one is required to have any skin in the game.  The new rules will allow borrowers to put no money down and will also allow them to have high debt-to-income ratios – as high as 43%. 
 
The new rules will allow creators of mortgage-backed securities to bundle pools of the above-mentioned loans and sell them on the secondary market without having any risk of credit.  Without any reform, investors would be duped into believing the risk isretained by the mortgage bond sellers and that these mortgages are safe.
 
In yet another part of the new rules, regulators forced risk retention for so-called leveraged loans.  These loans are made by banks to heavily indebted companies.  They do carry the risk which does not disappear when loans are bundled together. These bundled loans are what is termed collateralized loan obligations (CLO). What is even more surprising is that with these loans regulators mandated a 5% credit risk retention on the buyers of these loan pools.
 
While leveraged loans didn’t have anything to do with the financial crisis, the Fed’s reasoning for discouraging risky business loans is twofold.  Along with the Fed’s campaign justifying “risk retention”, the new regulations may offset distortions in the credit market from experiments in monetary policy engaged in by the Feds. 
 
Nevertheless, some experts believe the solution to all this would be to start raising rates for everyone, and not just certain classes of assets.  Another thing would be for judges to make certain provisions of Dodd-Frank are not applied o CLO managers in ways not intended by Congress.
 
The above should give the new congress something to think about, and the incentive to re-write certain provisions of Dodd-Frank, beginning with the repeal of the provisions regarding “risk retention”.
 
As regulators continue to enact rules making business loans more difficult to obtain, Capstone Capital Group, LLC has the solution. Capstone has been assisting small to mid-sized businesses for years.  They can help your business obtain the necessary working capital you need to help sustain and grow during uncertain economic times.  This is accomplished without all the red tape you would normally get from most banks.  Capstone specializes in Purchase order factoringSingle Invoice Factoring (“Spot Factoring”) and is geared towards firms in need of immediate cash. Spot Factoring is an alternative to business financing in that it provides no contract invoice selling, with flexible terms, in exchange for working capital from Capstone Capital Group.  Give Capstone Capital Group a call today at (347) 821-3400 to find out how we can help your business grow and succeed.

Small Business Exporters Fearing Credit Crunch

19:25 06 November in Blog
170
Congress made a decision to temporarily extend the Export-Import Bank. However, the decision is affecting business owners who depend on the credit agency. The agency decreases their risks when they export items.
 
The charter was extended by Congress until the middle of 2015. The extended time frame was a compromise between people who trusted the agency and individuals who wanted to get rid of it. Typically, the export-agency is reauthorized by lawmakers every few years.
 
Jennifer Dettman of Shark’s Veterinary Equipment stated that she depended on the bank because it provides open credit for two months. Dettman’s company only has seven employees where everyone builds surgery tables for various animals. Once built, the tables are sold to zoos, universities, and clinics in different countries. The company started using the bank’s insurance program back in 2011.
 
When a client orders a table from the company, the employees manufacture it for nearly two months. The table is insured by the Export-Import Bank for a fee of 0.5 percent of the overall shipping cost. Usually, the company makes each customer pay for this fee. When a client defaults, the company can process a claim after 90 days at the bank. 95 percent of the company’s losses will be covered with the bank.
 
According to Ms. Dettman, the bank provides very good coverage. Dettman also stated that the bank reduces her risks. Dettman knows that there are similar insurance coverage plans in the marketplace, but she does not know the price plans.
 
Trading partners in the United States seek help to support their exporters. According to supporters, the agency lowers the federal government’s deficit. Earlier this month, the agency reported that 675 million dollars were sent to the Treasury Department this year. Congress passed an extension that lasted until June 30.
 
Supporters now want a reauthorization that has a longer term. Last week, a bipartisan legislation was unveiled in the House Financial Services Committee by two key members. The bank’s charter will be extended for five years if the legislation passes. The new measure will require the bank to allocate half of their net earnings every year. A portion of the monies will be used to cover potential losses.
 
As the banking industry continues to get hammered by governmental regulation, gaining access to small business and working capital loans will become more and more difficult to obtain.  Capstone Capital Group, LLC appreciates these concerns and has the solution-Single Invoice Factoring.   Single Invoice Factoring functions as a safer alternative to traditional and unpredictable bank financing.  Our requirements are straightforward and easy to understand.  We are not subject to strict regulatory oversight and control. Capstone Capital Group, LLC is here to help small to mid-sized firms who are in need of immediate cash.  Our Factoring programs provide flexible, no contract invoice selling in exchange for working capital.  Give us a call today to find out how we can help you. 

 

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