Bank Loans Tag

Stake for Small Business Owners this Election Season

What’s at Stake for Small Business Owners this Election Season

19:40 29 June in Blog
484

Stake for Small Business Owners this Election SeasonU.S. presidential elections are a marathon, not a sprint, and this race has been exceptionally grueling—both for the candidates and the public at large. But more concerned than the average U.S. citizen are small business owners, who have responded to the uncertainty by delaying new hires, forgoing new equipment orders, and avoiding all but the most essential investments. We’ll tell you why confidence is slipping and what small businesses can do to buck the trend.

An Unprecedented Election Season?

Every presidential election captures the nation’s attention, but this year’s race seems to have no precedent. Whereas most Americans tune into the race after the primaries are over and the Republicans and Democrats have chosen their respective nominees, both parties saw unconventional candidates challenge the status quo during the primaries and capture the attention—and votes—of millions. Now that the primaries are over and Donald Trump and Hillary Clinton are set to face off in the general election, the future and the direction we’re heading remains as unclear as ever.

Small Business Owners Uncertain

According to a survey conducted by the Wall Street Journal and Vistage Worldwide Inc, one-third of business owners report that uncertainty over the coming election is negatively impacting their business.

Though small business owners are responding in different ways, the overarching theme is this: they have opportunities to grow their businesses, but they’re hesitant to spend the money. It’s not just the election causing concerns—there’s also global concerns, like the recent exit of the U.K. from the European Union, which threw global markets into a brief tailspin and the tenuous state of the Chinese economy. Closer to home, there’s also uncertainty over the timing and impact of future interest rate hikes.

Small-Business Confidence, by the Numbers

Given the picture we’ve just painted, it’s no surprise that small-business confidence fell to its lowest level since November of 2012 this month. Even industries that consider themselves ‘immune’ to political drama, like real estate, construction and development, are seeing activity dwindle. In the end, small businesses off all types face higher cost of capital than their larger counterparts, and that’s why they bear the lion’s share of the burden when uncertainty prevails and consumers reduce spending.

Luckily, there are several tools that small businesses can use to seize opportunities for growth—regardless of the prevailing political and economic climate.

Capstone Helps Small Businesses Boost Working Capital and Grow

For qualified clients, Capstone provides purchase order factoring, single invoice factoring, and full-contract factoring for work performed under contract with credit-worthy accounts. We have highly experienced professionals on staff to facilitate the purchase of work in progress and progress billing-related accounts receivable. Please visit our homepage or contact us directly for more information.

How to Grow Business in an Unnatural Economy - Capstone

How to Grow Business in an Unnatural Economy

21:58 15 June in Blog
476

How to Grow Business in an Unnatural EconomyStalled growth, disappearing jobs and a sense of foreboding are the defining characteristics of today’s economy. So, what or who is to blame? According to one theorist, the process of “creative destructions,” whereby the death of one business or industry gives rise to another, is failing. We’ll tell you why it’s happening and show you how Capstone’s single invoice and full-contract factoring allow businesses to grow along with demand, avoid taking on additional debt, and improve their balance sheets organically—even in an economy stuck in limbo.

The Numbers

A sobering job report released earlier this month showed the creation of only 38,000 new jobs —124,000 fewer than had been predicted — which is the lowest monthly total since September 2010. Furthermore, the Bureau of Labor Statistics reported that 94,708 Americans were not participating in the labor force during the month of May, bringing the participation rate to 62.6%.

A Limited Recovery

There’s no doubt that we’ve recovered from the Great Recession. The stock market has been on a 7-year bull run—although it has been tested recently. If you’ve tuned into the rhetoric coming out of the presidential race, you’ve heard the conviction that the recovery has been rather one-sided—that the gains of the last 7 years have benefitted a select few while the majority of the population has been left on the sidelines. No matter where you stand politically, the notion of a limited recovery seems to be supported by an analysis of Census Bureau data.

A Tale of Two Counties

According to the Census Bureau, the net increase of new business establishments is just 2.3% since 2010. Compare that with a 6.7% net increase during the 1990 recovery and a 5.6% net increase during the 2000 recovery. What’s worse—over half of the 166,000 new businesses formed in the United States since 2010 are located in just 20 counties. In short, a select few geographic areas are prospering, and the rest of the country is losing businesses and losing jobs at an alarming rate.

Aggressive Oversight and Misplaced Regulation

Touted as the culprits of the financial crash, banks and financial institutions, the drivers of growth since time immemorial, have been forced to tighten their lending requirements. The unintended consequence, of course, is that businesses’ traditional sources of credit have dried up. An enduring irony of the Dodd-Frank Act, which among other things was designed to limit the size of financial institutions, is that its burdensome requirements have actually forced many small community banks out of business—making the Big Banks BIGGER, not smaller.

If a lack of funding weren’t bad enough, businesses are now contending with rising federal regulatory compliance costs and state licensing requirements. And here the bitter irony continues. The new wave of regulations have disproportionally harmed small businesses—the symbol of the American Dream and American industriousness—not the large corporations the regulations were meant to control. A report ordered by the U.S. Small Business Administration found that the per-employee cost of federal regulatory compliance was $10,585 for companies with 19 or fewer employees. Companies with 500 or more employees, by contrast, paid an average of $7,755 per employee to stay compliant. Added to compliance costs are a rapidly multiplying number of state and local licensing requirements. 5% of employees required certificates or licenses in 1950. Today, the number stands at 30%.

A Metaphor for our Economic Ecosystem

There are many apt metaphors that describe what’s happening to the U.S. economy, but one of our favorites has to do with Smoky the Bear and forest fire prevention. Forest fires aren’t pretty, but they’re a natural and necessary phenomenon. They clear away the old, dead wood and give new generations of plants the space they need to grow. If the old, dead wood remains propped up for too long, the ecosystem ends up with less growth, less diversity, and a few individuals soaking up all the sunlight. And when a fire does finally come along, it’s much bigger and more destructive than it ever needed to be.

Boost Working Capital with Capstone

Capstone gives small and midsize businesses that are negatively impacted by Dodd-Frank and other constrictive legislation the working capital needed to seize opportunities for growth. For qualified clients, we provide single invoice factoring, construction factoring and full-contract factoring for work performed under contract with credit-worthy accounts. We have highly experienced professionals on staff to facilitate the purchase of work in progress and progress billing-related accounts receivable. Please visit our homepage for more information.

Interest Rates Predicted to Rise - Capstone Explained

U.S. Economy Picking Up Momentum in Q2; Interest Rates Predicted to Rise

19:56 27 May in Blog
424

Interest Rates Predicted to Rise - Capstone ExplainedAfter another harsh winter, the American economy is stabilizing and beginning to shrug off concerns of a prolonged slowdown or recession.

According to the latest economic gauges, industrial production is increasing, inflation is firming, and the housing sector is continuing to pick up momentum. All of these factors, combined with data reflecting retail sales rebounds, job gains, and rising consumer confidence, point to improved — though still less than spectacular — growth potential for the second quarter of 2016.

Interest Rates

Fed officials afraid of financial market volatility and poorly performing overseas economies have kept a steady hand on short-term interest rates throughout 2016. A domestic growth rebound in Q2 could be just the inspiration they’ve been looking for to raise rates this summer. Their next opportunities come at the policy meetings scheduled for June, July, and September.

John Williams, President of the San Francisco Fed, recently told the Wall Street Journal that the data is starting to make a strong case for rate increases not just in June, but potentially more than once in the next few policy meetings.

Despite Positives, Some Forecasters Remain Cautious

First quarter 2016 gross domestic product (GDP) increased only 0.5 percent over Q1 2015, but growth might be poised to accelerate.

Since the end of the recession, Q1 GDP growth has consistently been weak, followed by a rebound in Q2. The latest reports of modest but definite growth in highly important sectors would suggest that the same pattern is about to repeat itself in 2016.

Macroeconomic Advisers, a forecasting firm, estimates that GDP will expand at a rate of 2.3 percent this quarter. The Federal Reserve Bank of Atlanta estimated an even higher growth rate of 2.5 percent.

However, it’s not all sunshine and roses. Despite all the positive data starting to roll in, many forecasters are still leery about the economy’s current health as well as its general outlook for the future. Earlier in May, a Wall Street Journal survey of economists revealed an estimated 20 percent chance of a recession taking place in the U.S. sometime in the next 12 months.

Boost Working Capital with Capstone

For qualified clients, we provide purchase order factoring, single invoice factoring and full-contract factoring for work performed under contract with credit-worthy accounts. We have highly experienced professionals on staff to facilitate the purchase of work in progress and progress billing-related accounts receivable. To learn more, please visit our homepage.

Bank Loan or Invoice Finance

Bank Loan or Invoice Finance: What’s Best for You?

01:53 12 October in Blog
110

Bank Loan or Invoice FinanceHere is the situation: unexpectedly, you receive a huge product or service order. Besides the huge profit you’ll net by filling the order, you’ll also be establishing a business relationship with a desirable client. There’s just one problem: you don’t have the funds to buy the materials or pay your workers to complete the order!

Do You Really Need a Loan?

It’s in situations like this that business owners don’t hesitate. Nobody likes the notion of going into debt, but small business owners know that it’s part of the formula for success. The order is more important to the business’s future than going into debt. Taking calculated risk is what sets them apart from less enterprising individuals. The question is, should you get a bank loan or a get funding from personal invoice financing?

Bank loans are probably more common, but that doesn’t make them better. Until recently, taxis were the only way to get from point A to point B if you didn’t have a car, and hotels and motels were the only place to stay if you were in from out of town. There was a need in the market for alternatives, and Uber and Airbnb filled the niches. The same is true with single invoice finance.

Though bank loans are more common, single invoice finance offers some distinct advantages that you should know before making your decision.

Advantages of Single Invoice Finance

• Receive funding immediately
• Bank loans can take several weeks for approval, whereas single invoice finance can get you funds within 24 hours.
• Repayment is made by your customer
• Less paperwork
• Use only the invoice you are factoring for collateral
• Fewer fees
• Your credit is not important, your customer’s credit is important
• Once your customer pays the invoice, the contract is terminated.
• Won’t show on your balance sheet

Selling an invoice is selling money that technically belongs to you. It’s your asset, and therefore it doesn’t have to be noted on your balance sheet.

Get in touch with Capstone Capital Group and get in the game with factoring, funding, and financing. For more industry insights, read our previous blogs.

Bank Loan or Invoice Finance

Bank Loan or Invoice Finance: What’s Best for You?

21:53 04 September in Blog
130

Bank Loan or Invoice Finance

Here is the situation: unexpectedly, you receive a huge product or service order. Besides the huge profit you’ll net by filling the order, you’ll also be establishing a business relationship with a desirable client. There’s just one problem: you don’t have the funds to buy the materials or pay your workers to complete the order!

Do You Really Need a Loan?

It’s in situations like this that business owners don’t hesitate. Nobody likes the notion of going into debt, but small business owners know that it’s part of the formula for success. The order is more important to the business’s future than going into debt. Taking calculated risk is what sets them apart from less enterprising individuals. The question is, should you get a bank loan or a get funding from personal invoice financing?

Bank loans are probably more common, but that doesn’t make them better. Until recently, taxis were the only way to get from point A to point B if you didn’t have a car, and hotels and motels were the only place to stay if you were in from out of town. There was a need in the market for alternatives, and Uber and Airbnb filled the niches. The same is true with single invoice finance.

Though bank loans are more common, single invoice finance offers some distinct advantages that you should know before making your decision.

Advantages of Single Invoice Finance

• Receive funding immediately
• Bank loans can take several weeks for approval, whereas single invoice finance can get you funds within 24 hours.
• Repayment is made by your customer
• Less paperwork
• Use only the invoice you are factoring for collateral
• Fewer fees
• Your credit is not important, your customer’s credit is important
• Once your customer pays the invoice, the contract is terminated.
• Won’t show on your balance sheet

Selling an invoice is selling money that technically belongs to you. It’s your asset, and therefore it doesn’t have to be noted on your balance sheet.

Get in touch with Capstone Capital Group and get in the game with factoring, funding, and financing. For more industry insights, read our previous blogs.

Aftermath of the Dodd-Frank Law

The Aftermath of the Dodd-Frank Law

21:42 07 April in Blog
130

Aftermath of the Dodd-Frank LawIn 2008, when the American housing market crashed, it created a ripple effect in financial institutions. When the Dodd-Frank law went into effect in 2010, its purpose was to “promote the financial stability of the United States by improving accountability and transparency in the financial system.” Since being passed, only one new bank has opened in the United States. To show some perspective, in the 30 years prior to Dodd-Frank, over 100 new banks opened.

The new regulatory requirements are the reason behind this. Banks have had to hire full-time compliance employees in addition to purchasing new software and computing systems, as well as creating regulatory reports. FDIC state examiners are cracking down on banks and thoroughly investigating software systems that are within regulatory restrictions for loan reviews, IT, anti-laundering practices, cyber security and low-income borrowing procedures.

In looking at the impact this has caused, it’s clear that due to increased expenses, no startup banks want to take a risk when the odds are stacked so highly against them. In a statement earlier this year, Senate Banking Committee Chairman Richard Shelby said that improvements to rules impacting small banks should be made. However, if changes aren’t made, what does the future of startup banks look like? Furthermore, what will lending options look like for small business owners?

Fortunately, no matter what the future holds, Capstone Capital Group, LLC can be your capital partner. For years, we have helped growing businesses get the immediate cash they needed without the typical red tape that most banks require. We provide you access to capital through one of our customized funding programs, allowing you to scale your business instead of worrying about finances. For more information on invoice factoring, purchase order factoring, give us a call today at (347) 821-3400 and speak to a representative.

Sustaining Homeownership in an Unsustainable Economy

22:05 12 December in Blog
100
Recent data suggests that significant roadblocks could arise in the near future that would challenge those wishing to become homeowners.  The data collected was made public under the Home Mortgage Disclosure Act (HMDA). From this information, we can gather that African American homebuyers represent 4.8% of the total home purchase loans from 2013.
 
For conventional loans, African Americans were denied at levels that ranged from 25.5% to 56%, according to the HMDA data from 2013. Projections assume there could be as many as 17 million new U.S. households leading up to the year 2025. Potentially, 13 million of the 17 million new households could be owned by minority families. So, what does this mean for the future of our economy?
 
During the foreclosure crisis, African American home-purchase loan trends have seen a significant decrease, falling from 8.7% in 2006 to 4.8% in 2013. In contrast to the increase there has been with Caucasian home-purchase loan activity (rising from 61.2% in 2006 to 70.2% in 2013); these figures are staggering.
 
More than 70% of mortgage loans were made to African American homeowners last year, and 63% were made to Hispanic homeowners. We want to tell you what can be done. There are a variety of tools and policies at your disposal that are proven to extend sustainable homeownership to racial minority homeowners. The 97% loan-to-value (LTV) mortgage is one tool that you might have seen featured on Freddie Mac. The rate for this type of loan is extremely similar to that of loans with down payments as high as 10%. Federal Housing Finance Agency Director Mel Watt declared that the government conservator of Fannie Mae and Freddie will consider reinstating the purchase of LTV loans by the two government-sponsored enterprises. Alternative credit scoring models are also under consideration.
 
Accessible home-purchase loan options should be just that, accessible. Minority families need accommodation at the national level so they can maintain job growth and sustain their homes. Capstone Capital Group, LLC understands the difficulty facing homeowners of color and we stand with you in fighting for the tools and policies that are necessary for sustainable home ownership. For more information about Capstone invoice factoring, commercial and business funding solutions, give us a call today at (347) 821-3400 and speak to a representative.

Citigroup, Other Big Banks Pass Midterm Stress Test

17:28 14 October in Blog
190
The nation’s largest banks continue to prepare for exams to be conducted by the Federal Reserve next year. These exams are to determine whether they have the financial strength to handle a severe downturn akin to the 2008 financial crisis.

Under the 2010 Dodd-Frank financial law, the nation’s too-big-to-fail banks are required to run themselves through stress tests designed to ensure that they can weather another financial crisis. They do this by determining if they have sufficient liquid capital to handle some hypothetical worst-case scenarios. The “stress tests” are the Fed’s way of mitigating against another dismal performance by the banking sector in response to a financial calamity.

Citibank, Goldman Sachs Group Inc., J.P. Morgan Chase & Co. and others have been war gaming in preparation for the official Federal Reserve stress-tests. This round of tests is particularly important for Citigroup, which has had two requests for approval to return capital to shareholders rejected by the Fed. While Citigroup met the Fed’s capital requirements this year, the central bank expressed concern about the company’s competence in measuring the risks facing its global operations.

The Fed uses the so-called Tier 1 common capital ratio as its measure of a bank’s ability to buffer itself against another severe economic downturn. Federal regulations require that banks maintain a minimum of 5% common capital. Citibank chose a hypothetical sharp decline in emerging-market currencies as its doomsday scenario. Defaults by its sister banks in the Far East, and weaker housing markets throughout the region, it assumed, would subsequently occur. It predicted that its ratio would fall to 8.4% under that scenario. The bank’s projected ratio was 9.1% under the stress-test it conducted last year.

J.P. Morgan Chase and Morgan Stanley passed their own midterms with solid results. J. P. Morgan Chase predicted its capital levels under a hypothetical economic downturn would be 8.4%, down from 8.5% a year ago. Morgan Stanley projected its ratio would fall to 8.9%, down from a 9.5%. Bank of America Corp. said it would have the same capital level – 8.4%- that it had last year under a stressed scenario, but said it took on tougher hypotheticals on some fronts.

Goldman Sachs and Wells Fargo & Co predicted they would be in a better position to navigate strong financial headwinds than they were. Goldman pegged its estimated ratio at 10.1%, up from 8.9%, and Wells Fargo predicted its ratio would be up from 9.6%to 9.9%. The Federal Reserve’s annual stress-testing process typically concludes sometime in spring.

As big banks continue to shed riskier investments in order to pass the government’s stress test, small business will most likely suffer.  This is because small business loans may be subject to increased risk ratings making borrowing more difficult. Capstone Capital Group, LLC understands the concerns of commercial borrowers who are considering bank financing.  Accordingly, we offer various business finance options, including “Single Invoice Factoring” which functions as a safer alternative to traditional, and often times unpredictable, bank financing.  Our underwriting guidelines are simple, straightforward and not subject to stringent regulatory oversight and control. Capstone Capital Group, LLC specializes in Single Invoice Factoring (“Spot Factoring”) for firms in need of immediate cash. Spot Factoring provides flexible, no contract invoice selling in exchange for working capital from Capstone Capital Group.  Give us a call today to find out how we can help you.

Construction Spending is Booming in New York Amid Certain Challenges

17:50 12 September in Blog
170

Despite the recent surge in construction spending in New York, recent reports indicate the number of permits issued are down compared with prior years. The building congress which promotes the construction industry in New York estimates that while construction spending will increase this year, only 20,000 residential units will be created. This number represents a mere 9% increase in the total number of units built since 2013; this figure is still relatively low since more than 30,000 units were constructed annually during the period between 2005 and 2008.


Although some might see this uptick in residential development spending as a major step in the right direction, others believe there are still some significant challenges which need to be overcome. Particularly in the area of affordable housing. Mayor Bill de Blasio has been pushing for more affordable housing, however experts point to certain challenges including, high cost of land, rezoning issues, and city bureaucracy which makes it difficult for developers to build anything other than luxury condominiums.

 According to Richard Anderson, president of the Building Congress, “While the luxury residential market is booming in Manhattan and in parts of Brooklyn and Queens, we have our work cut out for us in terms of achieving Mayor de Blasio’s plan to create or preserve 200,000 units of affordable housing over the next decade.”


 The good news coming out of all of this is that the number of jobs created as a result of this surge in construction spending. Experts estimate construction jobs to reach 122,700 in 2014. With construction jobs slated to increase this year, the need for invoice factoring by contractors, sub-contractors, and construction companies has never been greater. It is common knowledge that in the construction industry, customers are slow to pay and contractors, sub-contractors, and construction companies for their work. Now these individuals and companies can get immediate cash for their invoices.


 With Capstone Capital Group, LLC’s single invoice factoring program, we can help you move on to the next phase of your project right away, or you can even take on new projects without worrying about additional working capital requirements.


 We have been helping small to mid-sized businesses for years obtain the necessary working capital they need to sustain and grow during uncertain economic times without all the red tape you normally get from most banks. Capstone Capital Group, LLC specializes in Single Invoice Factoring (“Spot Factoring”) for firms in need of immediate cash. Spot Factoring provides flexible, no contract invoice selling in exchange for working capital from Capstone Capital Group.

 To learn more what we can do for our and your business, visit us on the web at www.capstonetrade.com, or give us a call today at 347-821-3400.

Unintended Consequences Feared For New Rule on Loan Losses

19:35 28 August in Blog
150
Obviously, no bank could stay in business for very long if it lost money on every loan it made. Yet, new accounting rules set by the International Standards Accounting Board would force banks to post losses every time they grant someone a loan on the theory that a certain percentage of loans ultimately go bad. Critics are arguing that such measures are unnecessary and may have the unintended consequence of reducing the number of loans that banks make.


Less Transparency

Critics fear that if banks have to post every new loan as a potential loss, then banks that are having a bad quarter will simply cancel or postpone loans they might otherwise make in order to avoid negative perception. Some banks might do so even in a strong quarter simply to increase the appearance of profitability. The result might be less trustworthy reports and lower transparency in lending. Ironically, profits would look higher, but long term economic growth would be hurt by less available financing. This could be especially harmful during an economic downturn.
 
Effective in 2018 

These new accounting rules would affect over a hundred countries, but would not take effect until 2018. The need for the new loan loss rule was considered necessary due to the financial crisis of 2007-2008, in which banks were criticized for failing to recognize loans that were going bad earlier, thereby making it impossible for investors to protect themselves from bad lending policies.

Mixed Results 

Treating every loan as a potential loss at the outset makes that kind of fiscal blindness impossible. However, it also makes granting each new loan a threat to a bank’s bottom line, at least on paper and in the short term. The fear is that this will result in delaying or denying loans in order produce artificial profits on paper. 

Alternative Proposals

Some members of the Accounting Standards Board are suggesting alternative rules, such as a rule that would force a portion of the interest earned on each loan to be held in reserve in case the loan goes bad. This would accomplish the same goal of getting banks to keep more in reserve to cover their losses, but without creating incentives to deny loans or manipulate the books by strategic delays. It will be interesting to see if that or other alternatives to the currently planned loan loss rule are successfully introduced between now and 2018. 

Alternative Funding Sources
 
While government continues to restrict growth in the banking sector by making loans less available to borrowers, there are options.  Capstone Capital Group, LLC has been helping small to mid-sized businesses for years obtain the necessary working capital they need to sustain and grow during uncertain economic times without all the red tape you normally get from most banks.  Capstone Capital Group, LLC specializes in Purchase order factoringSingle Invoice Factoring (“Spot Factoring”) for firms in need of immediate cash. Spot Factoring provides flexible, no contract invoice selling in exchange for working capital from Capstone Capital Group.  

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

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

Download

    Logo

    Privacy & Terms