Capstone Wishes You a Safe and Happy 4th of July!

18:51 03 July in Blog
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The 4th of July is dedicated to honoring our great nation and taking the time to appreciate and celebrate our independence and freedom.

 

Thanks to all of our loyal customers and partners, we continually work together to help this country thrive. Together we build, fund and grow better businesses that benefit our economy and our country as a whole.

 

Look to Capstone Capital Group, LLC, to help your business start, grow and thrive. Capstone prides itself as a factor whose objective is to help its clients succeed. Our partnership, along with optimism and dedication in our free market society, is the catalyst which spurs economic growth and a more prosperous U.S.A!

 

Thank you for your continued loyalty and support. We wish you all a safe and happy 4th of July!
For more information on how to partner with Capstone, please email [email protected] or call (212) 755-3636 to speak with a representative today.

Now Trending! Outlook is Good for Start Up Businesses in the U.S.

19:16 26 June in Blog
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According to a recent report detailed in a publication entitled “Global Entrepreneurship Monitor”, 2013 was an optimal year for start up businesses. The report was based on a survey of adult American entrepreneurs between April and June of last year.  The report reflected a steady increase of new business creation since the recession leading up to 2014.
 
A Washington, D.C. economist attributed increases in business creation with access and availability of startup capital, whether from banks, angel investors or family members.  Likewise, in a downturn where credit markets are frozen and capital is more difficult to come by, this consideration is reflected in the overall number of startup ventures in any given period.
 
While the above reflects an optimistic outlook for budding entrepreneurs ready and able to start new business ventures, a different study, conducted by the Ewing Marion Kauffman Foundation (“Kauffman study”), painted an entirely different picture. 
 
The Kauffman study, which based its data from the U.S. Census Bureau and the Labor Department, concluded a lesser percentage of new business startups were created in 2013; and an even lesser amount of startups were created in 2011 and 2012.  A researcher for Kauffman attributed the conclusions of the study to the lower number of “new entrepreneurs coming out of unemployment” or “necessity-driven entrepreneurs” who, out of sheer necessity, are forced to start businesses because they are unable to find full time employment. 
 
Despite the disparity between the two reports, there does appear to be a trend towards economic recovery in the U.S. and an aim by the government, factoring companies like Capstone Capital Group, LLC, and others to help new business start, grow and thrive. Capstone prides itself as a factor whose objective is to help its clients succeed. As your factoring partner, we offer commercial financingsingle invoice factoring, which can provide you with the capital you need to accelerate your cash flow and help your business continue to grow and thrive in today’s market on a more flexible basis than other factoring companies.

 

Optimism in a free market society seems to be the catalyst which spurs economic growth in most cases.   Let’s hope the optimism continues to grow and investment capital remains steady in years to come.

 

For more information on how Capstone can help, please email [email protected] or call (212) 755-3636 to speak with a representative today.

 

Feds Streamline Lending Standards: A Good Idea Or Will History Repeat Itself?

18:35 19 June in Blog
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In an effort to assist minority entrepreneurs to borrower funds for business ventures, the federal government recently announced it would be streamlining its lending standards in connection with Small Business Administration (“SBA”) Loans.  In order to increase the percentage of loans made to African American business owners, the SBA will no longer require lenders to perform an analysis of cash flow or debt service coverage on loans of $350,000 or less.  The changes will begin starting July 1, 2014 and according to the SBA, these modifications in qualifying guidelines are aimed at simplifying and streamlining the lending process in an effort to incentivize banks to do more small-dollar loans in order to get more loans into the hands of traditionally underserved entrepreneurs. 
 
We at Capstone Capital Group, LLC find this change in criteria alarming.  As a private financial institution that assists its clients in accelerating their cash flow through Factoring accounts receivable it is our goal to increase access to capital for all qualified business borrowers.  However, providing access to capital to unqualified borrowers who do not have the ability repay will ultimately cause further problems down the line.  Once these no cash flow loans begin to default, Congress will have to act because taxpayer money is at stake.  The laws they ultimately will put in place will end up hurting small businesses access to conventional bank financing as Dodd-Frank has.
 
If history has taught us anything, it is that relaxing underwriting guidelines in an effort to extend loans to “underserving” individuals is not necessarily a good idea.  Like sub-prime commercial lenders in the past that offered small balance, stated income/stated asset with no debt service coverage, commercial loans to business owners who would not necessarily qualify for traditional financing, the government may be going down a dangerous slope with its new underwriting guidelines on SBA loans aimed at what they term as “underserved”.  The government lowering its lending standards to spur loan demand is a recipe we have seen all too often in this country, which ultimately has led to defaults and often times foreclosures. 
 
Recent events in the student loan market support the ultimate end game using relaxed standards.  Prior to the government handling student loans they were administered and underwritten by banks.  Now college graduates are graduating with mountains of debt because the ability to repay is not taken into account.  The tax payers will ultimately bear the burden of paying all of these poorly underwritten student loans back as more and more graduates are under employed and cannot pay their debts.
 
Further, and even more unsettling, is that commercial banks aren’t given similar consideration as they are prohibited from doing the same under Dodd-Frank.  As much as the government may believe loosening lending standards on SBA loans to spur lending to the undeserved is a good idea, these loans may very well be like the recent student loan crisis the government has created. 
 
Capstone Capital Group, LLC prides itself as a factor whose objective is to help its clients grow. As an alternative, we offer purchase order factoringsingle invoice factoring which can provide you with the capital you need to accelerate your cash flow and get your business back on track without undertaking debt you are unable to repay.

 

For more information on how Capstone can help, please email [email protected] or call (212) 755-3636 to speak with a representative today.

 

Considering funding your business by financing your home with a HELOC? You may want to reconsider.

19:17 12 June in Blog
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As banks have tightened up lending standards making it more difficult for small to mid-sized businesses to acquire the necessary financing they need in order to sustain and/or grow their organizations, business owners have considered alternative financing options.  One such alternative is the pledging of the equity in their own homes as collateral for the extension of a loan.  It may seem a bit drastic, but business owners will do anything to save and grow a business.  Especially ones they have devoted their blood, sweat and tears into.
 
Business owners who have been denied a small business loan by their bank, will quite often look at taking out secondary financing against their home to save their struggling business.  One such vehicle which will allow them to do this is a home-equity line of credit, more commonly referred to as a (“HELOC”) loan.  Business owners believe these loans are just the life line they need to keep their business afloat.  Nothing may be further from the truth.   
 
Despite the sluggish economic recovery, home prices are again on the rise and banks have once again begun to increase HELOC lending.  Some business owners may be thinking a HELOC is the way to go for their business capital needs.  They may want to rethink this and consider their options-here’s why:
Risks involved with HELOC loans
There are significant risks involved with relying on a HELOC to save your struggling business.  The major risk with HELOCs is its exposure to interest rate adjustment and fluctuations.  All HELOCs are adjustable rate mortgages (ARMs), but they are much riskier than standard ARMs. Changes in the market impact a HELOC very quickly. If the prime rate changes on April 30, the HELOC rate will change effective May 1. An exception is HELOCs that have a guaranteed introductory rate, but these hold for only a few months.  Standard ARMs, in contrast, are available with initial fixed-rate periods as long as 10 years.
HELOC rates are often tied to the prime rate, which some argue is more stable than the indexes used by standard ARMs. This is a misconception however, due to the fact that the prime rate doesn’t change from day to day. In 2003, it changed only once, to a low of 4% on June 27. However, it changed 17 times in the next three years-.25% each time, reaching 8.25% on June 29, 2006.  In 1980, it changed 38 times, and ranged between 11.25% and 20%.
In addition, most standard ARMs have rate adjustment caps, which limit the size of any rate change;  and they typically have maximum rates 5-6% above the initial rates.  HELOCs generally do not have adjustment caps, and their maximum rate is 18% except in North Carolina, where it is 16%.
Recent problems with HELOC loans
More recently, the problems with HELOCs aren’t so much with interest rate fluctuations but instead have to do with the fact that a majority of these loans were interest only for the first 10 years before any principal was required to be paid.  A majority of these loans were made during the refinance boom in early 2000 when the value of real estate was at an all-time high.  A good number of these loans are set to recast within the coming year which means that the borrower’s monthly payment is likely to increase substantially.  
A business owner who decided to take out a HELOC against his home 10 years ago may be in for the shock of their life when his or her monthly payment jumps from say, $250 to $560.  That additional $310 could have been used to purchase additional equipment for the business, or to take the family on that long awaited vacation.  In addition, because a HELOC’s rate is adjustable, there is a likelihood the monthly payment could increase even more if the interest rate moves up.  
Should the borrower want to refinance the first and second HELOC loan in order to reduce his payment shock, there may be enough equity in the property to do so.   Thus the borrower is stuck with the higher payments until such time the HELOC is substantially paid down and/or the value of the property increases enough to justify a refinance.

 

With the uncertainty of the market, and constant fluctuations in the interest rate, as well as corresponding increases in the monthly payment, a HELOC loan doesn’t really make good business sense in the long term.  There are much better alternatives for business owners such as “Factoring” which can give a small business the necessary influx of working capital it needs to sustain and grow.  Capstone Capital Group, LLC specializes in Single Invoice Factoring for firms in need of immediate cash. Single Invoice Factoring provides flexible, no contract invoice selling in exchange for working capital from Capstone Capital Group, LLC.
 
For more information on how Capstone can help, please email at [email protected]or call (212) 755-3636 to speak with a representative today.

 

Construction Firm Case Study

20:03 08 June in Case Studies
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Case Study Interior Design Firm: Purchase Order Financing & Single Invoice Factoring

COMPANY CHALLENGES

The main challenge this company faced was that they did not have to working capital to meet the need of the shade manufacturer, who required payment in November to cover a 6-8 week lead time. The shade manufacturer’s terms included a 25% deposit, 50% upon delivery and 25% upon completion. Additional payment arrangements were required for three other vendors.

BACKGROUND

In November 2014, Capstone Business Funding met with a successful WMBE company

• The company was awarded a six-figure bid from Bristol-Myers Squibb

• Job entailed the replacement of a shade system for cafeteria skylights with custom shades

• The schedule for the job was a February start and completion

• Terms of payment were Net 30 days from job completion

• Capstone provided a Purchase Order Financing facility so the company could purchase the custom shades, cover the cost of installation & rent equipment

• In addition, Capstone provided a Single Invoice Factoring Facility enabling the company to provide payments shortly after the customer was invoiced

PROGRESS & FUTURE OUTLOOK

Job performed was a great success for both the owner and Capstone leading to repeat business

• The company is confident it can bid on larger jobs even those it does not have capital

• Capstone looks forward to assisting the company in the future and fueling their growth

CAPSTONE’S SOLUTION LEARN MORE TODAY

Call: 212-755-3636 or (212) 755-3636

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Small Businesses, beware the “Advance-Fee Loan Scheme”!

21:04 05 June in Blog
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The “Advance-fee loan scheme”, as the scam is more commonly known, has been around for years.  However scammers have recently intensified their efforts in part due to the current financial crisis in addition to tighter underwriting requirements in regards to small business loan financing created by Dodd-Frank (Too Big To Fail ) Legislation.
 
The scam is fairly straightforward.  By way of telephone, email or internet communication , these so called  “loan broker” con artists target small business owners and entrepreneurs by promising them they can secure a sizable business loan for them and all they have to do is pay the loan broker a fee “in advance”.  According to Alabama Securities Director Joseph Borg, businesses with $1 million to $50 million in revenue are the most common targets because under the new legislation banks have the most difficult time lending to these microcap companies. 
 
What happens next is that the small business owner will pay a substantial upfront fee up to the loan broker with a loan never actually materializing.  The small businessman is ultimately met with dozens of unanswered phone calls and unresponsive emails, with the con man eventually leaving town.  According to Federal Trade Commission (“FTC”), this type of scam has been happening with more and more frequency. In 2013, the FTC booked a record 53,833 complaints about advance-fee loans filed by entrepreneurs and consumers.  This number is up from 43,070 in 2012 and 44,504 in 2011. 
 
As mentioned above, these scams typically target desperate business owners who feel like they have no other options.  Paying a broker a fee in advance without any guarantees of success is not the wisest of business moves.  If you are a small business owner looking for additional capital and have been denied a loan by your bank, it is not the end of the world.  Alternatives, such as invoice factoring offered by Capstone Capital Group, LLC, exist which can provide you with the capital you need to get your business back on track and do not require the advancing of upfront fees with the hope your loan will be approved and funded, if at all. 
 
For more information on Capstone’s services, please email at [email protected] or call (212) 755-3636 to speak with a representative today.

Download our Two Guides - Restarting your Business Post Covid & Turning your PPP Loan into a Grant

Capstone Capital Group, LLC wants to help you make sure your planning is flawless, which is why we are offering these free guides to help you get back to business on a sound financial footing.

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