business finance broker investing

Business Tips: Invest in Brokers

09:38 14 October in Blog, Broker Resources, Business Funding

Some finance companies prefer to work directly with clients and avoid working with brokers. Capstone takes a different approach to dealing with brokers, we invest in their success. There are practical business reasons to taking this approach with a financial broker including the opportunity to develop a long-lasting relationship.

Why Brokers Matter to a Finance Company

The most effective marketing program will not reach every person who could use the type of financing you are offering. Simply stated, working with brokers makes sense for every financial institution since it grows their potential market. Brokers can direct the clients who best fit your market directly to you and making sure they are well-educated in your products and processes makes good business sense.

Investing in Brokers Makes Business Sense

New clients help you grow your business. Reaching out to financial brokers is a plus because many businesses use brokers to help them find necessary business services. If you take the time to train the brokers about your processes including how you review applications, what financial criteria you use to determine eligibility, and the types of businesses you typically fund, you will spend less time on new applicants. This allows you to continue growing and targeting those businesses you are most likely able to help.

Relationship Building and Financing

Before a company feels confident dealing with a new financing method or financing company, they must feel comfortable with the people they are dealing with. In many cases, a company will have been working with financial brokers on an ongoing basis to deal with a broad range of financing needs. Given they have an established relationship, clients are more likely to feel confident about going to a new source of funds when the broker has an existing relationship with them.

How to Invest in Brokers

Investing in brokers is about education more than money. While every finance company should agree to basic principles such as ongoing fees to brokers if their client remains an active borrower, there are other ways to invest in these relationships. At Capstone, we are committed to our relationship with every broker and because of that, we offer the following to every broker we deal with:

  • Training – we believe a well-trained broker can grow their own business, their client’s business, and our business. That’s why we spend time training each broker on the products and services we offer.
  • Educational Materials– we make sure each broker we work with has the educational material they need to inform themselves, as well as their clients about the range of products we offer.
  • Brochures – while word of mouth advertising is always the most direct, we also understand having high-quality printed materials available for customers is sometimes a necessity. Our brochures are available to every broker who wants them to share with new brokers or with their clients.

Once a broker has started working with Capstone, they get a monthly accounting of all activity from their clients. We believe this type of transparency is important as it helps us develop strong relationships across our broker base. Additionally, we put no caps on a broker’s earning capacity: As long as their customer uses a Capstone product, the broker receives a commission on every dollar we finance. We believe this is a winning solution for us, for clients and for the brokers who represent those clients.

Capstone Group has a variety of programs designed to help brokers succeed because we believe brokers help their clients succeed. A successful broker helps raise the viability of their clients, and we believe our relationship with brokers is one of the reasons why we have continued to be able to supply customized solutions to small and mid-sized businesses across the United States.

Invoice Factoring in a Growing Economy

16:56 30 July in Blog

Currently, the U. S. economic outlook is good, and the business community is optimistic that it will continue to grow. This news is great for all types of industries but there are still several hurdles small and mid-sized business owners face with financing. Bank loans are easier to get than they have been for the last few years, but business owners still face long wait times, restrictions on use of the funds they borrow, and the added burden of taking on debt.

Regardless of the type of business you operate, you  need to have enough cash flow to allow you meet regular financial obligations including payroll, equipment and supply purchases, and paying suppliers. Business owners in all fields are still looking for ways to cut costs and one way to do this is to take advantage of their ability to pay suppliers earlier and take advantage of discounts offered. None of these works well if a company does not have enough cash flow. Meeting the challenges of these companies means addressing their needs without forcing them into taking on additional debt or giving up part of their company in return for cash.

Challenges Facing Small and Mid-Sized Businesses

While the current economic outlook is positive, there are still businesses who are recovering from the downturn in the economy. Chances are, all business owners have one, or more, customers who are still in recovery mode and are forced to pay their invoices at the last possible moment. This means businesses are waiting longer to get paid after issuing invoices which can lead to cash-flow problems.

Even though banks have become more “forgiving” about past issues with credit, there are still barriers business owners face when dealing with bank loans or lines of credit. Oftentimes, a bank loan can take several weeks or a couple of months to be approved. This means you are draining cash resources to meet ordinary expenses including rent, salaries for employees, payroll taxes, and more. Additionally, many business owners remain ineligible for standard lines of credit from banks thanks to restrictions on how they work. Even when a business has an open line of credit, there may be conditions attached to withdrawals which make it difficult for a business owner to use the funds as they deem appropriate. Banks often have specific language in their contracts which restrict how funds may be used whether it is funding from a loan, or for a line of credit.

Using Future Revenue for Cash Flow Today

Once you have issued an invoice for a completed order, services you have delivered, or for a job you have completed, you are playing a waiting game. You could get payment in as little as 15 days, or you may have to wait as long as 60 to 90 days. During this time, you still have financial obligations to meet, and may need cash to purchase materials to complete the next job. This is where invoice factoring comes in. You issue an invoice, and in as little as two business days, you could have a portion of the invoice immediately available in cash.

Invoice factoring allows small and mid-sized business owners to grow their businesses without the burden of taking on debt. Capstone has been able to offer a broad range of unique financing solutions to business owners who need working capital but are not interested in taking on additional debt, or who may not be eligible for bank loans or lines of credit. Contact a team member at Capstone today by email at [email protected] or call 347-410-9697 and speak with us regarding our unique financing opportunities and let us help you get the cash you need without taking on additional debt.

7 Things Clients Look for When Choosing a Brokerage

7 Things Clients Look for When Choosing a Brokerage

15:16 24 July in Broker Resources

Working with financial intermediaries offers business owners many advantages. Primarily, a financial intermediary can help you identify the right funding mechanism for your needs. Whether a business needs help with leasing equipment, securing lines of credit, or help identifying a financing partner, an intermediary can be an asset. However, as a financial intermediary, you should understand what clients are looking for and make sure you are meeting their needs.

1. Experience Matters for Clients

One of the primary reasons a business owner turns to a financial intermediary is their lack of knowledge about financing options. Experienced financial intermediaries help business owners understand what types of financing they might qualify for, what the costs associated with various financing options are, and what type of financing is best suited for their needs.

2. Industry Knowledge Matters to Clients

When a client is interested in working with a financial intermediary, they are going to ask about specific industry experience. Having experience in construction financing is helpful if you focus your marketing efforts on dealing with contractors and sub-contractors. If you have a lack of experience, you may not be able to advise your clients of the best options for their business model.

3. Communication Matters to Clients

Business owners have numerous challenges which they must deal with on a regular basis. When they are working with a financial intermediary, they depend on them for clear and regular communication. No business owner wants to discover weeks into a funding proposal they are missing documents, or they have no chance of securing financing. A financial intermediary must always remain in communication with a client, and make sure they are being honest with them regarding their potential for securing financing.

4. Loan Products Matter When Selecting a Broker

If a client goes to a financial intermediary, they expect they will have a menu of product offerings. If a financial intermediary is dealing only with local banks, the client is facing the same limitations and challenges as if they were going to the bank themselves. Being able to offer a broad range of products is important for growing your business, and to serving clients most effectively.

5. Competitive Rates are Important

Business clients do not want to pay any more than necessary to secure the financing they need to maintain their business. For a financial intermediary, this means not only must they offer a variety of products, but those products must be competitively priced in order to secure new clients.

6. Competitive Fees Will Help You Win Clients

Financial intermediaries who charge a reasonable fee will nearly always do better than a financial intermediary who has fees that are typically above industry standard. Clients understand when they are working with a financial intermediary they are paying for services but since they are cost-conscious, they do not want to overpay for these services.

7. Value of Time for Clients

Business owners are often facing time challenges when they are searching for funds for their business. This means a financial intermediary must be able to review the client’s documents, understand their funding needs, and come up with workable solutions to meet their needs. A skilled financial intermediary knows where to turn to meet their client’s unique needs. This is an important skill that is developed through experience and industry knowledge.

Business owners in underserved industries often face unique issues securing financing and as a financial intermediary, it is important you know there is help available. Whether your client is part of a minority-owned business, a contractor or sub-contractor, or a staffing company, Capstone is available to help. You can feel confident that regardless of whether you refer one client, or one-hundred clients, you will always be paid your origination fee for as long as your customer continues to do business with Capstone. We offer a full range of products, we offer financing to business owners who are in industries with unique financing challenges, and we are committed to helping financial intermediaries grow their businesses. If you want to learn more about how we support our referral network and their network’s clients, contact Capstone Capital Group today at (212) 755-3636 and see how we can help you grow your business

Meeting Financing Challenges Faced by Contractors

10:33 11 July in Blog

Contractors face unique challenges maintaining working capital and securing adequate financing. This is because of the unique business model under which most contractors operate. Typically, a construction contract involves a builder or developer who has an underlying loan. The loan terms generally involve the builder or developer drawing down funds as the project progresses.

This means the contractor is incurring costs before they receive any funds from the project. Additionally, once the contractor has completed a specific portion of the project, they still have to wait for funding to be paid to them from the builder or developer. Contractor costs begin the minute they deploy labor, hire a sub-contractor or secure materials to work on a project.

Banking Lines of Credit Often Elusive

For many contractors, securing a line of credit can be a real challenge. The reasons for this are numerous including the fact many construction projects last for several months or years meaning the contractor may be using their limited amount of working capital while working on a project month after month. These types of working capital drains do not allow a contractor to work on multiple projects at the same time and build up a backlog of work and successfully complete the existing contract on time and on budget bode well for a contractor who needs to secure capital to continue a project.   Most contractors have full-time staff members, equipment costs, and supply costs to contend with on a regular basis. This presents some unique financial challenges when they are involved in a labor-intensive job with payment coming later.

Cash Flow Issues Plague Contractors

When a contractor has numerous projects at the same time, working capital gets stretched thin. While they are paying their employees, covering normal operating costs, and purchasing supplies, they could be waiting 30 to 75 days after the completed the work 30 days earlier in the prior month.  Should their working capital cash flow be insufficient to meet their obligations, they could be facing additional challenges meeting payroll or securing materials to fulfill their contracts. This is one of the primary reasons why many contractors use spot invoice factoring to meet their cash flow needs during projects.

Spot Invoice Factoring Offers Relief

One of the options contractors have when trying to address their cash flow needs is spot invoice factoring. This process allows a contractor to obtain working capital within a day or two of issuing an invoice versus waiting 30 to 75 days until the builder or developer pays their invoice. This process allows a contractor to meet their financial obligations, purchase materials, and continue working on multiple projects while they are waiting for invoices to be paid.

Construction Financing for General Contractors

Another option available to contractors is factoring for the contract period. By executing a Master Purchase and Sale Agreement with Capstone, you can gain working capital multiple contracts covering several projects at a time ensuring that each subcontractor and material men are paid in a timely manner.  Bringing jobs in on time and on budget will make sure that you are able to negotiate the next contract with the project owner versus bidding against other contractors. Capstone understands you must pay subcontractors to get the job done and you may have more than one project underway at a time. Additionally, you want to secure the materials you need for current projects as well as have the freedom to bid or negotiate on new contracts while you are working on existing projects.

In addition to offering spot invoice factoring, Capstone also utilizes a system designed specifically for contractors known as ClearPay.This system allows contractors to fully vet their subcontractors, put bonds in place to ensure they meet the terms of the contract, and still have access to the cash they need to complete project requirements without going into debt. Capstone offers this program because we understand the unique challenges you face as a contractor. We help make introductions to Sureties we work with if issuing bonds to project owners is required subcontractors you are working with are going to complete the job in a timely manner as per your contract.

If you are a contractor and you need help developing a funding program that works to meet your specific needs, contact Capstone by emailing us at [email protected] or call us at (212) 755-3636 and let us help you develop a funding package that helps meet your unique needs.

Industry regulation changes so far in 2019 and how you are affected

14:32 03 June in Blog

Regulations nearly always result in businesses needing additional capital to comply. The costs could be direct costs, such as an increase in minimum wage, or indirect costs, such as those costs which are associated with changing reporting or licensing requirements. Regardless of the size of your business, this means you need to find ways to increase your income or maximize your cash flow.

Online Sales Tax Law Changes

Online retailers or service providers may feel the impact of a recent Supreme Court decision passed down in South Dakota v. Wayfair, Inc., 585 U.S. As a result of this decision, more online Ecommerce sites will be required to collect sales tax based on where they are doing business. This means if you do business in multiple states, you will have to determine how that state treats sales tax to ensure you are complying. Failure to do so could result in tax problems later. Currently, 31 states have standing tax laws requiring taxation of Internet purchases and some are based on transaction counts while others are based on actual sales volume.

Changes to Affordable Care Act Mandates

Many individuals were relieved to learn they no longer would face penalties for failure to maintain a healthcare plan which was compliant with the Affordable Care Act. However, business owners should be aware this change does not apply to them. For any business employing full-time employees must make coverage available. This coverage must be full coverage as mandated in the original bill.

Impact of State Increases in Minimum Wage and Paid Leave

Employers in more than a dozen states faced increases in minimum wage as of January 1, 2019. Increases ranged from a modest 20 cents per hour to nearly $1 per hour in other states. This means all business owners should verify what they are paying current employees and understand hiring new employees means paying the higher minimum wage.

While there have been challenges to implement paid family leave on a federal level, some states have implemented changes which employers in those states should be aware of for both current, and new hires. Currently, it is widely expected other states may implement these changes which will impact business owners of all sizes.

Follow General Data Protection Regulations (GDPR) Changes

While U.S. businesses are not currently under direction to take additional steps to protect customer privacy, many tech-savvy firms are already taking steps to ensure they are doing everything possible to ensure data privacy. This is because many believe that while this is currently a regulation for U.K. businesses, there will be a push in the United States to implement these changes. These regulations should be carefully monitored by every business, and where possible, steps should be taken to get ahead of potential future legislative changes before you are mandated to implement change.

The Impact of Federal Tax Policy Reform

There have been mixed reports about how the changes in federal tax law have impacted business owners. For example, we know most large businesses saw an increase in their bottom lines. The impact of the new tax law on small and mid-sized businesses remains a bit of a mystery, but one challenge is making sure you know how tax reform will force you to make changes in reporting, tax filing, and the impact of your deductions. Many businesses will be forced to seek assistance of a tax expert to ensure they are not missing valuable deductions or credits.

Since many new regulations only went into effect on January 1, 2019, some business owners may not feel the financial impact immediately. However, any business who is planning to hire new employees, or is impacted by changes in minimum wage may be facing immediate cash flow issues due to these changes. If you are one of the thousands of business owners nationwide who feel a cash crunch due to regulatory changes, contact Capstone today at (212) 755-3636 and let us help you identify the best options for increasing your cash flow without taking on additional debt.

Best state to open your loan brokerage

14:24 07 May in Blog, Broker Resources

If you are considering opening a new loan brokerage, like any other business, location matters. Some areas may offer more opportunities than other, regardless of what type of business you are planning to launch. For a loan brokerage, it makes sense to establish a business where there are numerous businesses starting, and a shortage of access to capital.

Various Metrics Available for Loan Brokerages

While North Dakota, Utah, Florida, Texas and Nevada show the highest average growth in new business startups, some of these states already have the most accessible financing available. For example, North Dakota and Utah along with Iowa and South Dakota have been rated by Wallet Hub as the states with the most accessible financing.

However, if you look at Florida and Nevada in this same report, they rank near the bottom in terms of accessibility to financing. Keep in mind, in order for a business to thrive, they need working capital. Keep in mind, for a small business, capital is a must. Before a small company can grow, they need to increase their market share, hire employees, may need additional inventory, and they will likely need equipment. That means they are the ideal target audience for a new loan brokerage.

Regulatory Requirements May Pose Challenges

Before you decide where to locate your business, you should research the requirements for loan brokers in the state. Some states may require individual licenses as a loan broker. If you live in one state, and you are doing business in another state, you may face other regulations as well. Careful review of a state’s financial regulations will help you determine where you can make the most difference, and where you may be subject to fewer regulations.

Borders Not the Barriers They Once Were

For those commercial loan brokers who are not interested in relocating to Florida or Nevada, all is not lost. Thanks to and ever-changing technology landscape, it is now possible to do business across the country as seamlessly as we once did business face-to-face. Many direct lenders make loan applications available online and thousands of lenders welcome loan requests from brokers regardless of where they are located geographically.

Your Most Important Goal: Meeting Client Needs

Your client’s goals will be the most important aspect of your business. Regardless of size, all businesses need working capital. This capital may be used in various ways including:

  • Increased marketing efforts
  • Paying employees/hiring new employees
  • Meeting regular obligations such as rent of space
  • Purchasing equipment
  • Ensuring proper inventory

As a loan broker, your task will be to match your client’s needs with the right lender, and the right capital type, regardless of where you are doing business. This is where Capstone can help.

Valued Relationship with Brokers

Many lenders offer a one-time referral fee to a loan broker who brings in new business. They are initially excited to do business with you because it means they have a new client. Oftentimes, once a relationship is established with your client, the lending institution turns their back on the broker who referred them. That’s not how Capstone does business — we nurture loan brokers who refer business to our firm. In addition to paying you a commission for the life of our relationship with your client, we also offer guidance in other ways. For example, Capstone offers those who refer business regular access to various training and other resources to help them grow their business. We believe that the more successful you are, the more successful we are. Therefore, in addition to regular accounting of all business transactions and regular commission checks from your clients, you can turn to us for assistance in expanding your loan brokerage.

If you want to learn more about how Capstone supports their referral network, contact Capstone Capital Group today at (212) 755-3636 and see how we can help you grow your business, and provide your clients the financing they need.

 

3 Things Brokers can do to Leverage Lower Rates from Lenders

12:05 01 May in Blog, Broker Resources

Interest rates are one way a broker can stand out from others in their field. With overall interest rates rising however, getting the best possible loan rates from lenders presents some interesting challenges. This is particularly true as lenders often shy away from making small business loans, preferring those loans where a company is well-established, has a proven track record, and has sizable assets. The irony is these are the same firms which may not need a loan.

As a finance broker, you are probably dealing with a company who may be struggling to obtain capital from their local banks. This means you have to evaluate your client’s needs, identify the right lender, and negotiate the best possible rate to meet their needs with that lender. Finding the right leverage when negotiating with a lender isn’t always easy but there are three things you can do which may help.

1. Identify the Business Strengths

When the business you represent has strong contracts with customers, has a sterling collection record, or has a low debt ratio, you have the ideal leverage to negotiate a lower interest rate. These are all plusses which can be used in discussions with a lender. Make sure you highlight these strengths when you submit a loan package because they could help you get a lower rate.

2. Offer a Lender Collateral

For some borrowers, collateral is the best leverage they have. For example, a company that has valuable equipment may be able to live with a lien on the equipment. This works best when a company does not have to worry about upgrading due to technological advances. Many lenders feel more confident lending when there is a backup plan in the event of default. This may also be helpful when seeking a lower interest rate.

3. Consider Lines of Credit vs. Loans

Lines of credit often have lower interest rates. They also offer other benefits including your client’s ability to use funds on an as-needed basis. The company pays interest only on the funds which they use, and the balance of the loan remains on deposit with the bank until it is needed. The added benefit of this type of financing is the customer also makes payments only on what they are using.

Consider an Alternative to Bank Loans

Keep in mind, lenders are in business to make money. To maximize their profit, they may be offering a variety of programs with slightly higher interest rates than you might otherwise expect. What many financial brokers overlook is the ability for their customers to get the money they need without having to take on the additional burden of debt. This can be accomplished through the process of invoice factoring.

Factoring invoices can provide numerous benefits to your customer. Some of those benefits include:

  • No Debt– factoring means a business owner has no need to borrow money. Lack of debt improves the business’s balance sheet. Not taking on debt also means there is no loan servicing to be concerned about meaning the business is not worried about having money to make loan payments every month.
  • Transfer of Risk – instead of worrying about collecting money from a client, when a business factors an invoice, they are transferring the risk of the collections from themselves to the factoring company.
  • No Hidden Fees – unlike a bank loan, you will not incur a late fee for payment nor will you incur a penalty for paying early. If a client pays the factoring company before the invoice is due, it merely improves your customer’s standing and strengthens their position the next time they opt to factor an invoice.

One of the numerous benefits of working with a factoring company is interest does not accrue on an outstanding balance. In fact, your customer will know up front exactly how much they are going to pay in fees. Another significant benefit is time: You never have to wait weeks, and in some cases months, for an answer. In most cases, you will know within a short period of time whether a transaction is approved, and your client will have the money they need within a few business days.

If you have clients you feel could benefit from invoice factoring, you should contact Capstone immediately. We’re committed to working with brokers across the country who have customers who need capital to keep their business operating. We can help you get your customer the money they need without worrying about the burden of added debt. Contact one of our account representatives today at 347-410-9894, reach out to us via email at [email protected] or fill out our simple online contact form and let’s see what we can do to help.

Merchant Cash Advance or Invoice Factoring

10:09 10 March in Blog, Business Funding

One of the options small businesses may turn to for financing immediate cash flow needs is a merchant cash advance (MCA). However, these cash advances can set off a devastating cycle of borrowing which can have catastrophic consequences for a business owner.

While a Merchant Cash Advance, (MCA) can help a business owner secure immediate financing, there are several pitfalls they should be aware of before opting for this type of financing. First, most MCAs are approved based on debit and credit card payments over a specific period. Secondarily, they can be very costly, with APRs (annual percentage rates) as high as triple digits.

MCAs Work But at What Cost?

While in the past all MCAs based advances strictly on debit and credit card transactions, more vendors are offering more flexible options which include all sales. Business owners would submit an application, the vendor will make a proposal to offer a certain amount of cash in advance and payment arrangement will be made. However, there’s more to this than meets the eye.

When using an MCA, the repayment terms typically mean the business owner will pay the advance through daily or weekly payments plus fees. The amount paid is generally based on various factors including the amount borrowed, plus the fees, plus the term of the MCA. Repayment is based on the amount of debit and credit card sales and is debited automatically from those sales. The predicament most business owners face is they have no control over the length of time it may take to repay the MCA — since it is based on new sales, this could mean it takes longer to pay the full amount. Remember, the longer repayment takes, the higher the APR. The other concern is the contracts may be confusing meaning your client may be signing something they do not fully understand.

Why Invoice Factoring Makes More Sense

For nearly every business owner, invoice factoring is a better option. There are several reasons for this including:

  • Easy to understand — contracts for accounts receivable financing are written in a manner which is clear to the customer. Business owners will be able to clearly review their terms and understand exactly what they are paying for fees.
  • Not based on future sales — rather than taking a chance on lower sales in the future, meaning longer repayment times, your clients are getting an advance on existing sales. This is good news because it means APRs are not higher, and they are not dependent on monies not yet earned to get the cash they need.
  • Different type of automatic payment — payments for factored invoice are made by the end client; the one who is paying the invoice. That means your client never has to worry about a weekly or monthly payment to pay back the advance they have received.
  • No impact on other sales — the only funds used to pay off the advance your client has received is the payment on the invoice they have factored. This makes sense because should there come a time when they have a need for additional cash, they can select other client’s invoices to factor.

While MCAs may be valuable for some clients, at Capstone, we believe invoice factoring is a more stable, safer option for nearly every client. Since repayment does not impact future sales, it also allows your clients more flexibility.

Capstone understands every business is different and may have different financing needs. That’s one of the many reasons we are here to offer a customized financial solution to help your client meet their immediate cash flow needs without impeding their future sales. Contact our offices today and let us see if we can help you find the best solution for your client. You can reach one of our highly-trained representatives at (212) 755-3636, you can contact us by email at [email protected] or you can fill out our simple to use online contact form. Let us help you drive your client’s growth and success.

 

Purchase Order Factoring

2019 Business Funding After A Strong Year Cutting Regulations

14:12 16 February in Blog, News

Rollbacks to Dodd-Frank and other regulatory rollbacks allowed banks to thrive through 2018. However, this has not made obtaining business funding significantly easier for small to mid-sized businesses. The challenge many face is these regulations have helped improve the bottom line of banks, but fewer community banks are having an impact on small business lending.

Public Policy, Banking and Financing

There is an expectation that deregulation will continue through 2019 as President Trump continues to move forward with stripping regulations. Some of these changes will make it easier for new businesses to form, others will allow businesses to save money, and still others are likely to make access to capital easier. However, there are some changes which are currently occurring in the banking industry which all business owners should be paying attention to including:

Payment services — as more online payment services continue to make it easier for people to pay online, 2019 may be the time when we see larger market players such as Amazon step up and offer payment services. This can be good for competition but may not have much impact on available financing options.

Digital banking growth — online banking will continue to explode as people become more confident doing their banking online. The challenge this can present for small and mid-sized business owners, is this could mean fewer employees at brick and mortar banks narrowing the opportunity for face-to-face interaction. There is no doubt that oftentimes businesses doing business with community banks depend on relationship.

Online attacks to banking — cyber attacks will continue to be a concern and as more people take their banking mobile, this can only spell trouble for online and mobile banking customers. Institutions will have to continue to work hard to earn customer trust and ensure security of banking information.

The Impact of the Decline of Community Banks

One of the challenges facing small businesses is the decline of community banks. Currently, approximately 77 percent of agricultural loans and over 50 percent of small business loans are funded by community banks. There are reasons why fewer community banks means capital is more challenging for small business owners.

Large banks and financial institutions tend to use a ‘one-size-fits-all’ approach to underwriting loans. This means they are looking at specific criteria and making their loan decisions based on that criteria. This is problematic for small businesses who often need someone willing to listen to the unique perspective of a small business owner and dig further into the financial strength of the company.

Despite the relaxation in regulations, community banks are facing challenges competing with larger lenders and with credit unions. Again, for small business, this is a challenge for financing since these financial institutions tend to use more of a cookie cutter approach to funding.

In many cases, small businesses do not meet the basic criteria including loan amounts, capital on hand, or assets which may be used for collateral.

Meeting Business Financing Challenges

Even with decreased regulations and assuming going into 2019 more banks show a willingness to open up funding to more small and mid-sized businesses, there are still specific business types which will continue to face headwinds when it comes to obtaining funding.

Subcontractors often face unique challenges obtaining funding since they are often at the mercy of a contractor. Contractors face their own challenges and when they go to a bank, they are often turned away because the banks do not always understand the business model which is being used. Other businesses such as staffing agencies, architects, and environmental companies may continue to face challenges obtaining much-needed financing. This is when Capstone Capital Group can be the solution to your cash flow and capitalization problem.

Capstone never takes the approach that every financing proposal will work for every company. We also understand the importance of underwriting every loan package as a stand-alone. This means we are uniquely positioned to help more small and mid-sized business obtain the right financing package to meet their needs. If you are facing challenges securing financing for your business, contact Capstone Capital Group to review your company’s working capital requirements. You can also request additional information about Capstone’s financial services upon request. Please contact us by filling out our simple form on our website  or contact us directly at us at 347-410-9894 to speak with a representative today.

New Challenges and Business Trends for 2019

13:17 07 February in Blog

Small and mid-sized business owners will face challenges in 2019 that were inconceivable a mere decade ago. As technology continues to improve, there  is often an urge to become a more digital firm. While this approach works to some degree, it is important to continue maintaining a face-to-face presence when dealing with customers. There are other trends to watch,  that  will challenge businesses to face moving into 2019 which business owners must adapt to as well.  Here are some business trends to watch for in 2019.

Trending Labor Market Changes

Competition for labor is tightening with fewer people seeking jobs. There are more positions unfilled, particularly for highly-skilled labor, making the market more competitive. To continue to attract the best talent, businesses will have to be proactive, offer competitive benefits packages, and in some cases, be willing to offer more flexible work schedules.

Trending Finding the Best Talent

One of the ways some companies may opt to find the best talent is to take advantage of remote work environments. Thanks to the increase in technological advances, it is possible to have a breadth of employees without having to be concerned about expanding an existing facility to house them. Outsourcing of web design, marketing, and customer service is likely to be a trend that continues well into the next decade. This option allows a business owner to make use of talent for short-term or long-term projects without having to offer rich benefits packages or take on the added expense of housing employees daily.

Technology Challenges to Meet Head-on

The EU General Data Protection Regulation (GDPR) is likely to gain popularity across the United States which will force businesses to comply with new technology requirements. This will likely be as a result of continued cybercrime and data breaches which will occur in every sector. Businesses must be prepared to ensure their customer data remains secure which will ultimately mean needing capital to meet these demands.

Challenges with Tariffs, Trade and Stock Market Volatility

There is currently a great deal of concern over tariffs and trade deals. This has resulted in a great deal of stock market volatility. Fortunately, consumer confidence, and business confidence seems to be high and this should help stabilize the markets over the short-term. There is some concern that withdrawing from existing trade agreements and entering new ones could potentially create problems for some businesses, but in most cases, these fears appear to be unfounded.

Banking Relationships Will be Key

Because businesses will continue to require capital, relationships will continue to be a key component for many businesses. Unfortunately, small community banks are still feeling the crunch of regulations despite record profits posted during 2018. Credit unions trends are beginning to do more business lending, particularly since they do not have the same requirements as community banks or larger banks. These changes will still have an adverse impact on small and mid-sized business which often cannot meet the criteria established for business loans. Changes in SBA loans will also continue to have an impact on these businesses.

Finding the Right Funding Programs

As business owners find a need to expand their staff, meet data protection needs of their clients, and expand their marketing, cash flow will become even more important. One of the best ways a business can meet these challenges is by avoiding debt while getting the capital that is so important to their continued growth and viability. This is when spot factoring, and other unique financing solutions will play a significant role for small business.

Capstone Capital Group can help small and mid-sized businesses meet their cash flow needs. We are committed to reviewing your business model and creating a financing package that best meets the needs of every business we work with. We understand the need for ongoing cash flow to meet your business needs and we are prepared to help you find solutions that work for your business. If you would like Capstone to review your company’s working capital requirements or would like more information about Capstone Capital Group, please contact us by filling out our online contact form. You may also contact us directly at us at 347-410-9894 to speak with a representative today.

 

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