business funding after ppp

MWDBE Funding Options Compared After the PPP Runs Out of Money

13:08 28 May in Blog

Disadvantaged businesses often lack sufficient access to business financing options. Some reasons for this might include a lack of collateral, lower net worth, too little credit and banking history, or other tangible and intangible barriers. To pursue certain opportunities, businesses also often need faster approvals and access to funds than banks and other typical lenders can offer. Because of these obstacles to obtaining traditional loans, disadvantaged business owners may need to consider business financing alternatives, such as invoice factoring.

Over the past several years, Capstone has served as a primary or secondary financing source for a variety of minority, women, and disadvantaged business entities, or in short “MWDBEs.”  We’re experts in making sure that companies can obtain the funding they need to pursue growth opportunities. Business owners can always contact Capstone with questions about business financing.

Has PPP Run Out of Funds to Lend?

Early in May 2021, the SBA announced that it could not accept more PPP loan applications. Out of $800 billion in forgivable loans meant to support small businesses through the pandemic, the fund only had $8 billion left, according to CBS News. Because of rapidly depleted funds and current borrower targeting, most small businesses cannot apply or get approved for PPP loans any longer, though the SBA said it would still process applications that had already been submitted.

The government earmarked the small pool of remaining funds for community banks that mostly serve MWDBEs. Even for disadvantaged businesses, the $8 billion is not expected to last long after considering it only took 13 days to use up the initial $350 billion in funding.

Alternatives to PPP for Small Businesses After PPP Ends

With the chance of obtaining one of these forgivable PPP loans largely gone, small businesses must compare other funding options. To get started, take a brief look at various financing alternatives, including invoice factoring, current SBA programs, bank lines of credit, business credit cards, and merchant cash advances.

Source of Funding Invoice Factoring SBA Loans Bank Lines of Credit Business Credit Cards Merchant Cash Advances
Approval/ Processing Time 2 to 7 business days At least 90 days and up to 6 -12 months 1 to several business days Instant to several business days 2 to several business days
Qualifications Creditworthy customers, quality account receivables Multiple and varies by loan but typically includes collateral, prolonged history of financials, a certain length of time in business, and credit Size of Corporate Balance Sheet, corporate liquidity, and value of personal assets; may require a prior relationship with the bank, above-average personal credit, and a personal guarantee Excellent credit Prior sales history, projected future sales, and a personal guarantee
Fees / Interest In general, range from one to four percent fees for 30 days Modest, interest rates vary by lender Typically 15  percent APR or more Typically, 15 percent APR or more Expect 30 percent APR or more
Maximum Amount No maximum; percentage of invoice or contract $5,000,000 maximum Varies $15,000 – $30,000 maximum Percentage of future revenues

Invoice Factoring

Instead of having to wait 30 to 90 days for customers to pay invoices, qualified businesses can sell all or some portion of their accounts receivable to an invoice factoring company. This makes invoice factoring a great option for companies that are new, have faced some credit challenges, would rather not take on debt, or simply need funding fast.

Factoring fees usually range between one and four percent, making invoice factoring a low-cost alternative when compared to the interest rates on most small business funding options. Generally, a business is able to obtain an advance for their accounts receivable within a day or two once initial underwriting has been completed. 

How to Apply and Qualify for Invoice Factoring

Qualified businesses usually generate invoices for other businesses or government contracts. Since the factoring company will assume responsibility for collecting accounts receivable, they’re mostly concerned about the creditworthiness of their client’s customers and quality of the accounts receivable. Processing time typically ranges from 48 hours to seven business days.

SBA Loans

The SBA has multiple programs, include some for traditionally disadvantaged business owners. Benefits of SBA funding may include competitive rates and flexible terms. Some even come with extra resources, like business mentoring, counseling, and education. Depending on the loan program and qualification, loans can range from as little as $500 to as much as $5 million. Some SBA loans impose restrictions on how the borrower can use the money.

Qualifying and Applying for SBA loans

Qualification depends upon the loan program. SBA might qualify businesses that have been declined by banks and other traditional lenders. Still, businesses typically need to demonstrate their ability to repay, and have a prolonged history of financials, certain length of time in business, and demonstrate that the company engages in sound business practices. Processing times and required documentation varies; however, typically expect to supply plenty of documentation and to wait at least 90 days and even up to 6 – 12 months for a loan decision.

Bank Lines of Credit

A line of credit from a bank can offer businesses a flexible way to draw upon funding when they need it. Lenders will offer each borrower their own maximum credit limit, which generally won’t exceed $250,000. Similar to credit cards, businesses can usually keep drawing on and repaying their balance, so long as they adhere to the terms. Interest rates for business lines of credit can vary wildly, but typically are around 15 percent or more.

Qualifying and Applying for a Bank Line of Credit

Banks generally want prospective borrowers to demonstrate creditworthiness and steady revenue over at least the past couple of years. Some online lenders also offer business lines of credit and may focus mostly on revenue and not even require business credit scores. Other lenders generally want to see credit scores of at least 600 to 650. Generally, the bank may have certain requirements for the size of the corporate Balance Sheet, corporate liquidity and value of personal assets. The borrower may also need at least six months of revenue, collateral or personal guarantees to secure financing.

Business Credit Cards

Business credit cards work somewhat similarly to lines of credit, though they typically have much smaller maximum balances. For instance:

  • Credit card issuers generally limit maximum balances to around $15,000 – $30,000.
  • Also, except for cash advances, businesses mostly use credit cards for purchases. Cash advances on credit cards usually come with higher interest rates than purchases too. A line of credit actually deposits cash into the business account.

Qualifying and Applying for a Business Credit Card

Qualifying for the best business credit cards generally requires good to excellent credit, with scores over 720. Even so, interest rates often range from 15 percent or more.  Some credit cards also charge an annual fee.

Credit card companies offer online applications and can even provide instant approval decisions. Otherwise, expect to wait from 10 days to two weeks to get approval and a credit card in the mail.

Merchant Cash Advances (MCAs)

Targeted to businesses with steady receipts of credit and debit card sales, a merchant cash advance is a form of non-bank lending that gives businesses the chance to obtain an advance against future sales. The business repays the advance through an agreed-upon percentage of sales which the MCA company automatically withdraws on a daily or weekly basis from the business’s bank account. Fees vary considerably, but compared to most other financing sources, they’re extremely high, from a 30 percent APR up to triple digits.  Generally, merchant cash advances can land small business owners in a never-ending cycle of debt and should be avoided at all costs. 

Qualifying for a Merchant Cash Advance

Lenders will consider historical sales volume to estimate future revenues and will require a personal guarantee to secure funding.  Very often, lenders can execute this process and offer approval decisions within a day or so.

Don’t Wait Until Your PPP Funds Run Out – Call Capstone for Business Funding Today

Capstone offers flexible factoring options for businesses in many industries. In particular, we understand the unique challenges faced by MWDBEs and we have been able to structure a funding platform specifically to support the working capital needs of these types of businesses. Capstone can serve as a primary funding source or can work within an existing bank relationship for opportunities that banks and other lenders have declined or take too long to approve.

Contact us today to tell us more about your business needs, and we will work hard to provide you with the best solution.

ar factoring vs bankline of credit

AR Factoring Vs. Bank Lines of Credit – Pros & Cons Reviewed

09:27 18 May in Blog

Jeff Bezos received the initial capital for Amazon when his parents offered to invest almost their entire life savings in his idea. Most startup and small business owners don’t have this luxury or might prefer to pass on such an offer anyway. Still, companies typically need to seek a source of outside financing in order to manage cash flow and grow.

On the positive side, some financial institutions offer flexible financing for various kinds of businesses. Explore the pros and cons of invoice factoring vs. a bank line of credit, two popular alternatives for new and small business funding. The best solution really depends upon the kind of customers a business has and how they invoice clients.

Pros and Cons of Invoice Factoring Vs. a Bank Line of Credit

Even though invoice factoring (also known as “A/R” or “accounts receivable” factoring) and bank lines of credit can both provide flexible business financing, they don’t work the same way. Most of all:

  • A bank line of credit equals debt: Getting a line of credit from a bank increases the company’s debt on their Balance Sheet. Interest on this debt may indicate that the business ends up having to pay back considerably more than they borrowed. Outstanding debt might make it difficult to qualify for other kinds of financing. High interest on some lines of credit can even generate future financial difficulties.
  • Invoice factoring equals a sale: In contrast to a line of credit, invoice factoring does not increase business debt. In fact, it’s a sale of an asset that generates cash flow. It’s true that factoring companies charge a fee; however, they also relieve the business of the effort of collecting payments and make it easier for businesses to grant and extend credit to their own customers.

Is Qualifying for Invoice Factoring Harder Than Qualifying for a Bank Line of Credit?

In general, qualifying for invoice factoring depends upon:

  • Customers: Factoring companies rely upon the creditworthiness of invoiced customers and not the business selling the invoices. Thus, they favor businesses with B2B or B2G invoices. Most factoring companies also prefer to deal with domestic customers as well.
  • Invoice timing: For non-recourse transactions, the factoring company will assume the risk of collecting receivables and won’t want to take on any additional risk that a business is unable to deliver on the goods or services they’ve billed their customer for. Therefore, the business must submit invoices for delivered goods or services that have been completed/ accepted and not in-process or planned work.

In contrast, businesses need to demonstrate creditworthiness and financial strength to qualify for a bank line of credit. Approval can take time. After approval, banks and similar lenders generally make it relatively easy and fast to draw upon the funds.

How Much Does AR Factoring Cost?

As with any kind of financing, costs may vary depending upon the unique business and the factoring company you use. In general, expect fees to range from two to four percent for the first 30 days a balance is outstanding with the factor company, usually depending upon many factors such as the general creditworthiness of customers and how long it takes them to pay. Typically, businesses can, expect upfront advances of 70 to 80 percent of the total invoice. The factoring company will also issue a rebate for the rest (minus fees) after successful invoice collections.

How Much Does a Bank Line of Credit Cost?

Interest rates typically depend upon the company’s creditworthiness and the size of the draw. For some customers, banks might charge as little as five percent; however, they can charge as much as 20 percent.

With a bank line of credit, the borrowers only need to pay interest on money they actually take and not the entire maximum line of credit. On the other hand, some banks also charge periodic fees to manage the account, even if the business doesn’t use any credit facility.

Is Invoice Factoring or a Bank Line of Credit Better?

For a business with the right kind of receivables, invoice factoring can offer several advantages over a bank line of credit. For example:

  • Lower financing costs: When a factor company pays for invoices, they generally only subtract a small fraction of the total for fees.
  • No additional debt: Businesses sell invoices to a factoring company and don’t need to assume extra debt or pay to service that debt.
  • Reduced collection effort: The factoring company will issue an advance to the seller and handle the collection of the receivable from there.
  • Easier approval for businesses with creditworthy customers: Businesses with domestic B2B or B2G invoices for delivered products and services should enjoy quick approval.

Partner With Capstone for Fast Business Funding

Businesses in all types of industries need to deliver products or services, issue invoices, and then wait to get paid. Capstone’s invoice factoring services can provide upfront funding, so their clients don’t have to wait to get the working capital that they need to pay operating expenses and invest in growth.

Besides invoice factoring, Capstone also offers a variety of funding options for all sorts of companies. Contact Capstone today to find the best funding option for almost any business.

construction mobilization funding

Funding Construction Mobilization With Invoice Factoring

10:45 13 May in Blog

In the construction industry, the term “mobilization” refers to the effort and expense involved in getting a project started. Some common examples of mobilization tasks might include scheduling crews, securing permits, establishing a site office, arranging transportation, renting or buying equipment, buying materials, and even back office support.

All of this advanced preparation requires funding and has to get done before work can commence. Especially for newer construction businesses, it’s this first project phase that tends to generate the most cash flow problems as, typically, mobilization costs are not recouped till long after they are incurred. Without funding these initial steps, the construction businesses are unable to make progress, will struggle to meet performance marks and therefore will not be able to bill out for and obtain progress payments.

That makes mobilization a common source of construction cash flow problems especially for new businesses that haven’t had time to develop cash reserves and might lack experience writing contracts and selecting the best financing options. Sadly, some construction businesses even turn down projects and opportunities for growth simply because they lack the funds to get started and can’t manage cash flow until they do.

How to Plan for Construction Mobilization Funding

Capstone is an expert with construction financing and knows how to help our clients obtain the money they need for all stages of their projects. A good strategy for managing cash flow and obtaining financing for mobilization typically starts by developing a construction mobilization plan.

This mobilization plan can include an overview of:

  • Necessary personal, equipment, and resources
  • Permits, licenses, and other regulatory requirements
  • Funding needed to complete all the mobilization tasks
  • A schedule with key deadlines and performance targets


First, this plan should serve as a useful resource to set budgets, compile cash flow projections, and schedules to keep work on track during the mobilization phase. Even the process of developing the plan should improve efficiency by helping planners account for possible obstacles early and ensuring they can get the job done within the customer’s specifications. Even more, the plan can serve as a tool to help obtain quick funding to manage cash flow during the mobilization phase.

Account for Mobilization Efforts Within the Contract

The mobilization plan should serve as a framework to explicitly account for mobilization costs within the project contract. Ideally, negotiating a mobilization clause into the contract will demonstrate the kind of good planning and transparent communication that prompts customers to agree to advance a mobilization fee (or deposit) to fund these necessary expenses.

Customers will see a schedule of values with mobilization costs and understand that their construction partner needs funds to get started. While the customer might not offer to write a check as soon as they’ve signed the contract, the terms of the mobilization clause can allow the construction company to generate an invoice or payment application for a mobilization advance fee.

Even so, construction companies might need to wait an additional 30, 60, or even 90 days for payment from their customers. Rather than waiting for payment on the invoice from their customer, the construction business can present it as documentation to apply for Capstone construction financing. This gives the construction firm the ability to convert their invoices or progress billings for mobilization into immediate cash flow through invoice factoring.  It also allows businesses to offer their own customer’s payment terms and still enjoy rapid funding for their efforts.

How Does Capstone Construction Financing Work?

Capstone’s unique approach to construction financing helps their clients get projects off the ground rapidly and with access to adequate financing. Rather than having to apply for and then assume more debt, the construction company simply factors the customer’s invoice for the agreed-upon advance rate.

With this kind of funding, called construction invoice factoring, the construction company receives money quickly, and Capstone takes on the responsibility of collecting payments for invoices. Unlike most invoice factoring companies, Capstone has the unique ability to accept invoices or payment applications for mobilization and knows how to close these deals.

The simple funding process works like this:

  • Once Capstone verifies the invoice with their client’s credit worthy customer, they are able to provide funds right away.
  • After the customer pays the invoice, according to the invoice terms, Capstone will send along any remaining reserve funds after taking out their factoring fee.

Even more, as the project moves forward, clients may ask Capstone to advance more of their invoices; however, they don’t have any obligation to. This flexible approach leaves construction companies free to ask Capstone for immediate funding when they need it and pass on it when they don’t.

How to Work With Capstone for Fast, Flexible Construction Financing

Working with Capstone means construction companies don’t have to turn down projects of opportunities for growth because they lack the financing to get started. Instead, invoice factoring gives them the chance to take on more work because they won’t need to wait to get paid and in turn, use their funds to manage cash flow.

Take a moment to learn more about Capstone construction funding opportunities. Call or email us at any time to have a conversation with one of your experienced financing representatives or apply online.

invoice factoring fund startups

Is Invoice Factoring an option when starting a company?

12:24 23 April in Blog, Business Funding

Every new business hopes to join the ranks of those famous unicorns that turn profitable right out of the gate. Sadly, most startups fail to meet this goal. Even worse, the best concepts often struggle or even fail within the first few years.

According to research cited by SCORE, almost all budding companies wrestle with cash flow problems — and problems with cash flow management represent the almost universal plague that leads to new business stumbles and even failures.

These startups may have succeeded at bringing ideas to market and even attracting customers; however, 82 percent of failed new businesses just did not have enough funding to grow or, in many cases, keep operating. And for just these kinds of startups, invoice factoring could provide a solution to improve cash flow in ways that would lead to thriving, growing young companies.

Yes, startups should consider invoice factoring as a new business financing option. Find out how invoice factoring will significantly improve cash flow, how it works, and if it’s the right solution for all startups.

How Invoice Factoring Empowers Startups

The most basic kind of invoice factoring refers to selling accounts receivable to a third party. In other words, startups can convert their unpaid invoices into immediate working capital.

New businesses won’t have to wait days, weeks, or even months for their customers to pay invoices. In turn, they can use this money to service more customers, develop new products and services, pay operating expenses, expand marketing, or in whatever way best suits their goals.

Some highlights of the benefits of invoice factoring for new businesses include:

  • Credit building capacity: Factoring can help establish a credit record for a business.  Generally, a new company has no existing credit record making it more difficult to establish lines of credit, negotiate additional payment time with suppliers, and negotiate new contracts. Since factoring depends on the creditworthiness and financial strength of the startup’s customers, it is a great option that allows the business to meet debt obligations promptly.
  • Streamline collections: Collecting payments can be stressful, but not with a dependable factoring company.  Since the factoring company will be in charge of chasing customer payments, the startup can invest its time in more meaningful activities.
  • Minimize risk for payment:  Many non-recourse factoring companies take the credit risk away from the business.  In this structure, they will shoulder all the risk of credit default once they purchase the invoice.
  • Improve cash flow: The business can offer their customers credit and still invigorate cash flow by getting immediate working capital from invoices.
  • Factoring is flexible:  Businesses have options when factoring their accounts receivable. They have the opportunity to include all eligible customer invoices or select a few customers because they have extended payment terms.

How Does Invoice Factoring Work for New Businesses?

Capstone offers flexible factoring options while eliminating hassles. That means startups can start enjoying the benefits of better cash flow and improved efficiency right away. This list explains all the steps involved in invoice factoring a common, flexible solution for startup businesses:

  1. Invoice customers as usual for goods or services rendered.
  2. Complete an easy application and approval process to get started.
  3. Submit copies of invoices (or any type of progress billings) along with required documentation on the receivables chosen for invoice factoring.
  4. Enjoy an immediate advance that usually amounts to 70 to 80 percent of the total invoice value, depending upon the agreement.
  5. After the customer pays, receive a rebate for the remaining balance, minus modest factoring fees.
  6. Repeat when needed.

What are the Best Businesses for Invoice Factoring?

In general, invoice factoring can provide the best solution for companies doing business with creditworthy customers but have delays in cash flow because of a time gap between invoicing for goods or services rendered and getting paid. Other typical characteristics include:

  • Working capital strain due to insufficient credit lines from banks and suppliers
  • Immediate growth opportunity with a product, customer, project, or market share
  • Sells finished goods or services to creditworthy buyers
  • Losing sales and missing sales opportunities
  • Backlog of orders or jobs
  • Trade cycle of 60 – 150 days, or more


How to Find the Best Financing Solution for a New Business

Capstone provides essential funding requirements to emerging and growth companies. Take a moment to learn more about Capstone’s flexible options for new business invoice factoring.

Invoice factoring helps new and established businesses manage cash flow and work more efficiently. New companies can discuss their needs and concerns with a Capstone representative to choose the best financing option for their unique situation.

Contact Capstone by email or phone to tell them more about your business needs and goals, so they can help you choose the perfect option.

letters of credit in trade finance

Letters of Credit in Trade Finance

15:50 13 April in Blog

In its basic form, a Letter of Credit (or LC) is a document produced by a financial institution delivered to another financial institution that guarantees an Importer’s payment to an Exporter will be received on time and for the correct amount. The Importer is required to send payment to the issuing institution who then transfers funds to the Exporter’s advising institution or directly to the Exporter. In the end, the Exporter will receive payment as long as the transportation of the goods is compliant with the LC’s terms and conditions. Letters of Credit are most often used between Banks that are in different countries for international trade.

Trade Finance Process Flowchart

Trade Finance Process Flowchart

Letters of Credit Process

  1. Importer and Exporter enter into a Sale Contract.
  2. Importer applies for the Letter of Credit with their Bank.
  3. The Bank issues the LC and sends it to the Exporter’s (Foreign) Bank.
  4. Foreign Bank authenticates & advises the LC.
  5. Exporter receives LC and produces Trade Documents. Once the LC matches the Terms and Conditions of the Sales Contract, the goods are manufactured.
  6. Prior to shipment, the goods are inspected.
  7. Goods are shipped to the Importer.
  8. Exporter submits Trade Documents to their Bank.
  9. Foreign Bank examines the Trade Documents for compliance.
  10. Foreign Bank sends Trade Documents to Issuing Bank who also examines Trade Document for compliance.
  11. If all Terms and Conditions have been met, payment will be disbursed among the parties involved.

Trade Finance

Trade Finance assists with trade cycle funding gaps and allows businesses to obtain goods from a Supplier with cash upfront. When a Supplier abroad is exporting goods to a business partner elsewhere, they will want assurance that payment will be received in a timely fashion. Instead of the business owner paying for goods right away, the institution handling their import financing will instead produce a Letter of Credit that will be presented to the Supplier or their finance company. As previously mentioned, the Letter of Credit serves as a guarantee of payment when the conditions of the initial Supplier agreement are met. Upon receipt of goods, payment is made to the Supplier or their finance company.

This arrangement can be used for a one-time purchase of supplies or continuingly if there will be a lasting business relationship between the Importer and the Exporter.

Reasons to Use an LC with Trade Finance

There are a few key reasons why an LC should be used with Trade Finance

  • First, International Trade between countries is difficult due to a variety of issues including differing laws, customs, languages, currencies, and so forth.
  • In general, LCs offer a more secure method of payment for both parties involved.
  • Next, the financial institutions handling the transaction offer their expertise and resources for aiding the completion of the transaction.
  • The central benefit of using an LC is that it mitigates the risk of the buyer missing their payments, especially if the Seller is unsure of the buyer’s credit.

Need funding for trade? Capstone is here to help: Let us work with you today to help you find the best solution to your cash needs without taking on more debt. Whether you are facing an immediate one-time need for cash to secure a contract, or you require a long-term solution to cash flow, contact our skilled team of representatives today and let us work with you to find the best options for your funding needs.




Exploring Merchant Cash Advance Versus Invoice Factoring

Getting a Small Business Loan with Bad Credit in 2021

09:33 04 March in Blog, Business Funding

One of the consequences of COVID-19 is the negative impact on the credit of small and mid-sized business entities. Lending institutions are generally risk-averse and the pandemic has only further pushed them to implement more stringent underwriting standards focused on the creditworthiness of borrowers.  This creates a problem as more and more businesses do not qualify for a traditional line of credit. 

Since many businesses were forced to completely — or partially — close down from early 2020, with some even closed or operating at significantly limited capacity well into 2021, business owners are now grappling with the effects that limited income and slower cash flow have had on their credit. In fact, according to McKinsey Insights, lenders will be forced to take a deeper look at credit criteria moving forward. One statement stands as a stark reminder of this crisis on the finances of businesses “From the perspective of financial institutions, the conditions that the COVID-19 crisis triggered have specific implications for managing and mitigating credit risk.”

Securing Financing Amid Pandemic Concerns

Thousands of small business owners were eligible for, and received, Paycheck Protection Program (PPP) funding to help them through the pandemic. For most, however, this capital only helped them maintain operations for a short period of time. Many business owners would never have believed that one year into the pandemic they would still be operating at limited capacity and still uncertain about a return to full operations. 

While vaccines and other mitigation factors have lessened the overall human impact of the pandemic, the long-term financial impact on businesses is still largely unknown. Some businesses are faced with declining credit ratings meaning they could face steeper than normal challenges securing funding.

Alternative Funding Solutions

A better alternative for businesses is to use their accounts receivable to gain access to capital.  Invoice factoring is able to provide immediate working capital and liquidity.  Funding is not dependent on the creditworthiness of your business.  Instead, the creditworthiness of your customers provides the basis for determining whether you can factor your invoices. 

Typically, businesses are forced to wait 30, 60, or even 90 days before they are paid for the products or services they provide.  Factoring turns those invoices into cash — nearly immediate cash. This allows business owners to have the necessary cash on hand to sustain operations and meet obligations to their customers, while not depending on the financial institution for a line of credit.

Some of the advantages of invoice factoring include:

  • Faster than business loans — in most cases, rather than waiting weeks, or months for bank approvals, you can have cash in your bank account within days of accepting a factoring contract and having your customers approved.
  • Flexibility and control — factor all of your invoices or only specific ones.  You select which customers you’d like to factor.  You may elect to use a process called “spot factoring” which is a funding method where you simply take a valuable invoice and turn it into nearly immediate cash with no long-term agreement.  This is common when a company has a single one-time need for immediate capital to get them over a period of slower cash flow that is not anticipated to continue.
  • Strengthen or repair your credit profile — with sufficient cash flow you will be able to meet vendor and supplier payment commitments.  As you build up positive credit history by paying in full and on time, it will gradually boost your business credit score.


Qualifying for funding is relatively easy. The key requirement is to have invoices that are payable by dependable and creditworthy customers.  Whether you need immediate capital, or you need regular access to cash, invoice factoring can help you meet your financial obligations. 

Customized Solutions Work Best

This is one reason more businesses are turning to Capstone Capital Group. Regardless of what your business credit situation is, your financing needs are not the same as every other small business. We do not try to take a one-size-fits-all approach to capital since every business operates differently and has different cash demands.  We take the time to understand your business model, your goals, and your overall financial situation. We then work on a customized solution that suits your financing needs. We understand the importance of cash flow to the long-term success of your business and we are committed to providing solutions to help you succeed. 

Capstone is here to help: Let us work with you today to help you find the best solution to your cash needs without taking on more debt. Whether you are facing an immediate one-time need for cash to secure a contract, or you are in need of a long-term solution to cash flow, contact our skilled team of representatives today and let us work with you to find the best options for your funding needs.

What To Do When You Lose Funding Amid a Pandemic

13:16 11 February in Blog

Losing funding is devastating to a business at any time, but the ongoing crisis created by the COVID-19 pandemic has shaken up banking on a massive scale which makes keeping your business functioning financially even more difficult. We already know government programs like the Payroll Protection Program (PPP) were given out on a first-come, first-served basis and many small businesses were left out in the cold. Even with subsequent rounds of funding, many businesses were unable to qualify for various reasons including, in some cases, their banking relationships.

Other businesses were faced with being notified by their financial institutions that lines of credit were being suspended, small business owners who were depending on their home equity to take a line of credit were found those lines were suspended, and still, others learned banks were not accepting new applications for loans. Where does this leave business owners who need capital to maintain their current business operation or to expand their operation?

Why Financials Institutions Are Decreasing Their Lending Availability

The COVID-19 pandemic has financial institutions making changes in how they do business.  One of the more prevalent trends we may see are financial institutions taking measures to counteract increased risk with their lending practices.  There are specific reasons behind this change including:

  • The continued economic fallout from COVID-19 – banks do not like uncertainty and lending in today’s environment can potentially be riskier than ever because they are not able to accurately predict the continued economic challenges which commercial and retail clients may face.
  • Liquidity issuesfinancial institutions are not free from the economics of COVID-19. Many are facing their own issues with reduced liquidity making to fund extensions of credit and renewals of revolving lines of credit.  In certain situations, capital may only be allocated to the most profitable business loans.  They will be ready to shed under and non-performing loans.  Banks may also be minimizing their exposure to nonessential lending services (such as investment banking, international expansions, etc.) that consume considerable amounts of capital.
  • Risk assessment standards – portfolio risk thresholds are being reassessed.  Financial institutions have or will be, implementing more stringent underwriting standards and tightening their policies for extending credit.  This makes it harder for small businesses to secure new financing or renew their current facility.  The historical financial performance of their clients and other previously relied upon metrics may no longer be relevant risk indicators.  


These factors and others impacting financial institutions mean business owners need contingency plans to access the capital they need. Business owners also need to be prepared for potentially losing an existing line of credit when they need it most. While this is important DURING the pandemic, the same could be true for any time your funding lines are interrupted.

Finding an Alternative Funding Source for Long-Term Success

Given these challenges, more businesses are finding they fall outside the acceptable risk threshold to access and retain lines of credit as well as more traditional business funding.

When faced with financial demands or an opportunity to expand operations, some business owners may feel pressured to reach out to private investors and offer a piece of equity in their company. There are other options businesses can consider including working with vendors to extend credit terms, taking out a personal loan, or invoice factoring.  Each has the potential to provide you the capital you need on relatively short notice.  Joseph Ingrassia, the Managing Member for Capstone Capital Group, LLC, provides insight and points of consideration for each in a recent Forbes Expert Panel article on Funding Your Business with a Personal Loan? 14 Things to Consider First and also in Emergency Business Funding: A Look at Your Options.

Business owners should avoid taking steps that could damage them financially. For example, these include hard money lenders, credit card advances, and merchant cash advances (MCAs). These options may be available to you but in the long-run, they could harm your business financially as they typically come with high-interest rates and will create a never-ending cycle of debt.

Converting accounts receivable to immediate cash through invoice factoring makes sense from a practical point of view. Here are some of the reasons why this option is a good one:

  • No new debt on your balance sheet
  • No need to give up equity in your business
  • Personal liability is limited
  • You have control and flexibility — factor all your invoices or only specific ones
  • The fastest method of obtaining cash for your immediate business needs

While banks may prefer to lend to businesses with only positive financial performance, stable cash flows, and predictable revenues, factor companies, such as Capstone, can often work beyond these issues and provide funding based on the quality and strength of a business owner’s accounts receivable.  Also, businesses often turn to invoice factoring for their cash flow needs as the approval process is simpler and faster than the underwriting process at a bank.  That means businesses have quicker access to crucial working capital. 

This is one option, among others that we can help establish to help your business meet your financing needs. Capstone continues to be a leader in developing customized plans for businesses in a wide range of industries to help them meet their capital needs. Whether you are currently facing uncertainty in your funding, or you want to have a plan in place which eliminates the need to take on new debt from your bank, contact Capstone by email at [email protected] or call us at (212) 755-3636. Let us help design a customized financing package that works for your business.

Securing Funding for PPE Transactions

12:47 25 January in Blog

Businesses that have been producing and supplying personal protective equipment (PPE) are facing numerous challenges since the pandemic began in the United States in early 2020. In addition to facing unprecedented demand for their products, they were also facing problems with shipping thanks to travel and export bans, and concern for the health and safety of their workforce.

For some businesses, none of these was the most significant challenge — the biggest challenges came in two phases, the first obtaining raw materials, and the second having sufficient working capital on hand to ensure they could ramp up their production to ensure they can meet the demand for finished products.

Meeting Challenges Needed to Successfully Deliver PPE

Some of these challenges have continued. In fact, as recently as August, there are still ongoing reports of shortages of PPE for healthcare workers. In part, this is because no one planned for a need of the amounts of PPE which would be needed — today, not only healthcare workers, but daycare centers, schools, offices, and restaurants are also in need of PPE. This need is likely to continue well into the end of 2021 given it could take that long to get vaccines distributed and administered to larger portions of the population of the United States.

For those businesses who supply PPE finding the balance between maintaining open supply lines and ensuring they can meet demand while building inventory for future demand can be challenging. The challenges range from being able to obtain raw materials and ensuring they have the logistics set up for delivering the products they are manufacturing. This may involve the need to not only have a sufficient amount of capital on hand to purchase raw materials but may also require a company to review how they currently receive raw materials and deliver completed products.

COVID-19 Impact on Manufacturing Overall

In a broad report released by® we learned just how challenging manufacturing been since the beginning of the pandemic. Some of the statistics show:

  • 46 percent report shipping and logistics disruption
  • 35 percent face production restrictions in offshore factories
  • 8 percent cite an increase in the costs of goods

Those who are manufacturing and supplying PPE must be prepared for this “new” normal and prepare for these challenges during 2021 and going into 2022. Demand is likely to continue in industries that once never called for PPE including restaurants, school districts, and smaller business owners including hair and nail salons, and more. This is an opportunity to grow your business if you have the financial plan in place to take advantage of the increase in demand.

Securing Funding to Fulfill Contracts

With demand for PPE continuing to escalate, businesses must have sufficient funding to source the PPE items from third-party manufacturers or to secure raw materials if you manufacture products in-house. Those with contracts can either take out a loan, impacting their balance sheet, sacrifice equity in their company by raising funds from outside sources, or they can opt to leverage purchase orders and invoices for cash.

Many large users of PPE including government municipalities, hospitals, and school districts order supplies using purchase orders (POs). In effect, these purchase orders are a contract between you and the other party stating they want to purchase a specific amount of PPE by a certain date. You must be prepared to deliver this product while understanding that upon delivery, it could take as long as three months, and in some cases longer, for you to be reimbursed because a payment has been made. One of the most critical financing tools you can have at your disposal in these cases is purchase order financing. Not only will you have access to secure the necessary capital you need to purchase supplies or raw materials, but you also have the opportunity to develop a reputation as a business that fulfills orders in a timely manner. This alone can help fuel your growth.

Smaller PPE contracts for facilities such as nursing homes assisted living facilities, and restaurants may order smaller quantities of materials. Generally, you can fulfill their needs from inventory provided you have been able to maintain inventory. However, even in these cases, you may not receive payment for your products until 60 to 90 days following delivery — leaving you with insufficient cash flow to replenish your inventory. Invoice factoring can help bridge these cash flow gaps.  Factoring allows you to supply products to your end customers, and when it comes time to issue them an invoice, you can use factoring to convert the account receivable into immediate cash. 

Whether you need immediate capital to fulfill an existing purchase order, need cash to replenish your dwindling inventory, or are facing challenges with supply lines, you should consider contacting Capstone. We offer an entire suite of financial tools designed to help you succeed. Call us at (212) 755-3636 to speak with a representative today and let us help find a solution that works best to meet your current challenges.

Assessing your 2020 performance and setting business goals in the ‘new norm’ for 2021

12:11 18 January in Blog

There is little doubt 2020 presented unique challenges for business owners. Across the United States, thousands of business owners were faced with rolling forced shutdowns, others had to adjust to fewer employees in their workspace, and still, others faced the potential of closing permanently.

Business owners that were lucky enough to have their business survive 2020 must now take stock of their past year’s financial performance to determine the goals that will set them up for success as they navigate the next twelve months. 2021 will not be just another year. The recent rollout of approved vaccines is good news for everyone. This is important because it will play a role in businesses getting back to financial “normal” and how we set our goals for 2021. Here are some of the things you need to consider when evaluating your 2020 performance and prepare to establish your goals for 2021.

Evaluating Your 2020 Goals and How You Adapted to Challenges

Chances are you first laid out your business plan for 2020 with certain projections, goals, and benchmarks which were quickly thrown out of the window at the first onslaught of the pandemic. Looking back on 2020 as a whole may have you feeling somewhat defeated. However, it is important to put the year into perspective. Since March of 2020, nearly every business owner has faced financial challenges due to the impact of the pandemic.

Those businesses who were able to stay operational because they could have their staff work from home were forced to increase spending on technology to use at home. Others were facing serious reductions in orders resulting in less income. Some businesses were faced with increased spending while grappling with decreased income while finding it necessary to invest in personal protective equipment to allow their operations to continue.

For some small businesses, the Paycheck Protection Program (PPP) was a lifesaver. For those businesses who did not qualify for PPP, some are looking at their bottom lines and seeing a sea of red. It can — and will — get better if you put everything into perspective and prepare your plan for 2021. The message here is simple: Do not let the setbacks of 2020 cloud your vision for 2021. The time to prepare for 2021 is now and you want to set a realistic set of goals while keeping in mind the challenges you will likely be facing. Here are some steps you should be considering:

Understand the Landscape of Business

One of the factors you will have to evaluate is what impact COVID-19 will have on your business entering 2021. Even with vaccine distribution beginning, chances are your industry will face some impact from slowdowns either from your vendors or customers. While it may be challenging to accurately forecast the impact, make sure you have some plan in place for any slowdowns in distribution chains, manufacturing chains, and supply chains.

Businesses will have to face head-on the new reality and set their financial goals for 2021 based on what they know today — however, this also means many will be forced to reevaluate those goals should the landscape of business change. Ensuring financial stability in an uncertain marketplace will require businesses to address their finances in a way that is flexible. Developing a financial plan that allows for change as the market changes will be the key to continued success during 2021.

Preparing Financially for 2021

Naturally, one of the biggest factors for 2021 will be the capital needs of your business. Chances are your business may also be facing additional operating and overhead costs in the new year which have to be dealt with. Some ways to help you prepare to include:

  • Know the figures – have you accounted for all your financial activity in 2020? What are your profit margins and break-even points? Do you know the balances owed on all outstanding debts or balances owed to you?
  • Identify areas for business growth – determine if you have maximized revenue and profitability with your current client base. Customer needs may have changed so businesses should look for other goods or services to supplement their demand. You should reach out to your customer base and determine their foreseeable needs for the next three to six months.
  • Set short-term and long-term financial goals then prioritize them – this will help you make sound financial decisions when unexpected issues arise.
  • Create a cash flow projection for a minimum of four to six weeks and one encompassing all of 2021 – this will help you identify your immediate working capital needs and help you see the broader picture of your business’s finances. You may be able to reduce, cut, or reschedule expenses to give you time to collect on your receivables. Having a plan with sufficient reserves will help keep you on track to meet your financial obligations.
  • Avoid financial products that promise immediate access to cash or ones with lax underwriting requirements – chances are there are some unforeseen strings attached. Stay away from payday loans and merchant cash advances (MCAs). They typically come with exorbitantly high-interest rates and will create a never-ending cycle of debt. 
  • Establish a means for monitoring both the local and national impacts caused by COVID-19 – monitoring will be crucial. Stay up to date on current events and monitor your industry to ensure if additional shutdowns were to occur what that would mean for your business and how you could mitigate the risks associated with it. Better planning today means a brighter tomorrow for the success of your business.

Going into 2021, your business will have to adapt to whatever the “new” normal which everyone will be facing. The COVID-19 vaccines show promise, but we cannot expect a return to the “old” way of doing things for at least the first half of the year.

Do not allow yourself to overthink the issues you faced in 2020, instead look forward to 2021 with a realistic plan to ensure you can ride out the storms facing us. Being prepared is the key to your ongoing success. When you are thinking about capital requirements, contact Capstone, and find out how we can help you be prepared financially to adapt to whatever changes you may face in 2021. You can reach one of our representatives by contacting us at [email protected] or call us at (212) 755-3636 to speak with a representative today.

Forbes Council – Funding Your Business With A Personal Loan? 14 Things To Consider First

10:56 15 January in Blog
In December’s Forbes Expert Panel, Capstone’s Managing Member Joseph Ingrassia discusses what to expect when funding your business with a personal loan and how you will probably need to put up personal collateral.

“You’ll probably have to put up personal collateral.

Many banks and credit facilities require a pledge of all of your personal assets, and this pledge may limit your ability to borrow additional funds as your business grows. Having your personal residence as collateral may add stress to your personal relationship since the bank may also require your spouse’s personal guarantee. If there is a blip in the business it could lead to the loss of your residence.”

– Joseph Ingrassia, Capstone Capital Group, LLC


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