Blog Tag

Funding Opportunities and Small Business Industry News

10:34 14 January in Blog, Business Financing
337

As the year approaches the end, it is time to focus on what steps we could be taking to increase business during 2019. On this front, there is plenty of good news for small businesses, particularly those who are designated as minority-owned, those businesses which have a HUBZone designation, or Service-Disabled Veteran Owned.

Increased Government Contracts May be Available

The U.S. Treasury Department recently released information about the potential of increased contracts during Fiscal Year 2019 for businesses with the previously mentioned designations. This is great news for those businesses who wish to start doing business with the federal government since this is a great way to grow your business.

Understanding the Designations

Small businesses may not be aware they could be eligible for prioritization to win government contracts. Here are the descriptions of each of the categories where your business may have priority over other businesses when it comes to bidding, and winning government contracts.

  • Minority-Owned Business — a small business where the ownership is at least 51 percent controlled by a minority population may request minority-owned designation. Minority is defined as those identifying with specific groups including Asian, Black, Hispanic and Native American.
  • HUBZone Designated — small businesses located across the United States may be surprised to learn they are in a HUBZone. Currently, the commitment is that at least three percent of all government contracts will be awarded to businesses who fall into this category.
  • Service-Disabled Veteran-Owned — these businesses are owned and operated by one or more veterans who have service-related disabilities. Another important note to be aware of is the day-to-day operations must also be managed by a veteran. Overall, there is a commitment to award three percent of contracts to small businesses meeting this criterion. This is in addition to the commitment made by the Veteran’s Administration utilizing the Veterans First Contracting Program.

Rising Wages, Low Interest, Greater Competition

More small business owners are being forced to consider increasing wages because of the tightening labor markets. However, this is not necessarily bad news since interest rates are still well under control. Thanks to some regulations being modified, there is also a lessening of restrictions on small businesses.

During October of 2018, most small business owners believe it is a good time for them to continue to increase hiring, invest more in their businesses and many have experienced greater sales. While this is all positive, most small business owners still feel access to capital is one of the challenges of operating their small business.

Financing Your Growth

Fortunately, small businesses, particularly those who wish to do business with the government have options. Businesses often need additional resources to place successful bids, which in many cases, may be out of reach for a small business owner either financially, or simply due to a lack of contacts.

Capstone Capital Group can help! We have experience helping small minority-owned businesses get the credit they need to grow their business. We also offer a range of services designed to help you get the resources you need to successfully bid on government contracts.

We have helped with non-legal contract reviews, providing bid support letters, and helping minority-owned businesses get the accounting, estimating, and engineering referrals they need to support their bid.

For more information on Capstone’s diverse funding programs, please contact us at 347-821-3400 or email [email protected]to speak with a representative today. Our highly trained, professional representatives will work with you to obtain a minority business loan and start growing your business today. Let us put our years of experience to work and help you grow your business in 2019.

Understanding the Typical Types of Factoring

09:13 04 May in Blog, Business Financing
179

Factoring is a financing arrangement that is typically used by small and medium-sized businesses to help them maintain a steady cash flow. As every business owner understands, cash flow is important to ensure the successful, continuous operation of their business. This is why it’s important to know the different types of factoring.

In general, factoring means a company is turning over their invoices to a third party in return for receiving a portion of those invoices in cash within a few business days. Primarily, there are two types of factoring, recourse factoring and non-recourse factoring.

What is Recourse Factoring?

As a business owner, you are assuming a certain risk when you extend credit to a customer. Typically, the more reliable a client, the more favorable the terms you are offering. Some businesses even offer a discount if a client pays more rapidly. This type of factoring is called recourse factoring.

In fact, it is common for a company to issue an invoice with two separate terms such as offering a 5 percent discount if paid in 15 days and a 90-day net pricing. This means the client has 90 days to pay the invoice in full. Should the client not pay their bill in full at this time, the company would then begin collection activities which may involve refusing to ship additional product, having their accounts receivable department call the company about payment and in some cases, adding on a fee for late payment.

When customers refuse to pay, the business may turn over the collection activity to a collection agent or attorney.

However, if the business has opted to finance the invoice with a factoring company, they no longer must be concerned about collecting payment for the invoice.

The factoring company takes over the risk associated with the invoice, and the client is indebted to them. Om return, your business receives a portion of the face value of the invoice and the balance is held by the factoring company until the company pays the invoice. If the company fails to pay the invoice, the factoring company may ask you to substitute another invoice of similar value in its place.

This is known as recourse factoring.

What is Non-Recourse Factoring?

In some instances when a company borrows money, they are putting up assets such as equipment, real estate, or equity in the business. This allows the lender to seize, and in some instances, liquidate the asset to make themselves whole.

If the agreement between the borrower and lender calls for “no recourse” it means the lender has no option to turn to the business owner for any shortfall between what the company owed the lender, and what the liquidated assets provided.

In the case of non-recourse factoring, however, there is a slightly different meaning. When you deliver product to a customer, you do so under the belief the company will still be in business when the invoice comes due in 30, 60 or 90 days.

However, if you have factored that invoice, the factoring company is assuming that risk since they have given you a portion of the face value of the invoice up front. Should the company go out of business, and you have a non-recourse contract with the factoring company, the company will absorb that loss without any financial repercussions falling on your company. Non-recourse factoring typically only protects you and your business in the event your customer closes their doors before they pay their invoice.

If you are considering entering into any type of factoring contract, it is important to determine what your liability is should other problems occur with your customer. If the contract is non-recourse, talk to the factor to determine how they define non-recourse factoring.

At Capstone Capital Group, we work with small and medium-sized businesses to help them solve their cash flow problems. Contact us today and let’s discuss your needs and discuss your options for recourse, or non-recourse factoring.

Understanding Non Recourse Factoring

12:21 16 April in Blog, Business Financing
198

Like any type of financing, accounts receivable factoring is a risk taken by the factoring company. In most cases, accounts receivable factoring is based on the creditworthiness of the underlying customer. Therefore, a factoring company does not provide financing for invoices that are made to an individual customer, instead they provide funding against invoices made to other companies, or to government entities. This is why we need to understand non recourse factoring.

Collection Activities and B2B Transactions

Typically, when businesses are completing transactions, they offer terms that may give a company up to 90 days to make payment.

In some instances, they offer discounts if an invoice is paid sooner. In the case where a company has opted to factor their accounts receivable, they turn the risk, and collection activities over to the factoring company. However, what happens when the customer does not pay their invoice?

If a company is managing their own accounts receivable, they may put forward demand notices, and hold the company responsible for paying the invoice with certain late charges which are normally laid out in their contract. Many contracts also have a recourse clause which may hold the company owners accountable personally for unpaid bills.

If payments are not made as agreed, you would typically stop doing business with the company until the invoice was paid in full. Chances are, you would likely require a deposit or full payment before doing additional business with the company. This is known as full recourse.

Meaning of Non Recourse Factoring

But, what happens if you are working with a factor and they have offered to factor your receivables with no recourse?

First, it is important to understand what no recourse means. In most factoring contracts, no recourse usually means that the factoring company will not seek payment from you under certain conditions.

The typical condition is the insolvency of the customer that occurs during the time of the factoring period.

For example, if you have issued an invoice that is due in 90 days, and a factoring company has advanced you cash against that invoice, the company would have to go out of business during the 90 day period between issuing the invoice and having the payment due.

What Non Recourse Factoring Does Not Cover

Even if your factoring company has agreed to factor your receivables without recourse, there are certain exclusions which you should be aware of. For example, in most cases, factoring advances will not be considered without recourse if:

  • There is a dispute over an invoice – if you have issued an invoice and your customer disputes the invoice, chances are, the factoring company will not allow you to walk away from the debt you incurred because of factoring.
  • You deliver products to non-paying customers – if you have a customer who has been consistently late paying invoices and you are still delivering product to them, you are increasing their outstanding amount owed, meaning the factoring company is at even more risk of losing money. Most of the time, you will be held responsible for these invoices.
  • You owe the company money – if you have a reciprocal arrangement with a company you do business with, and the company credits amounts you owe them against amounts they owe you, the factoring company may not grant you the ability to factor those invoices without recourse.

When entering into a factoring contract, it is important to understand the terms you are agreeing to abide by.

We make sure our contracts are easy to understand and you understand whether you are accepting funding against your receivables with or without recourse.

Capstone is a private finance company offering various solutions to businesses to provide them with more consistent cash flow.

Contact us today to request funding or to speak with one of our representatives to learn more about how Capstone can help your business grow and flourish.

Small Business Funding Crunch - Capstone business financing

The Small Business Funding Crunch

11:07 15 October in Blog
155

According to a new study, there should be no doubt about how strapped for cash many small firms are today.

Small Business Funding by the Numbers

JPMorgan Chase Institute’s think tank relied on data collected from their in-house bank to work up an analysis of the current state of the small-business sector. They found that the small-firm landscape is less likely to be home to the future Ubers and Googles of the world and more likely to be filled with lots of tiny businesses living month to month.

The companies JPMorgan Chase Institute looked at may be small, but they represent a surprisingly large portion of the American economy. The Small Business and Entrepreneurship Council (SBEC) reports that small businesses account for nearly half of the national GDP and more than half of all new job creation in the U.S. — the latter being a metric that the Fed watches closely to determine whether or not the economy can cope with financial constrictions. But even though they’re contributing a great deal to the economy, JPMorgan Chase said, there remains ignorance about their financial outlook.

The Big Picture

On average, small firms surveyed in the recent study had just 27 days’ worth of cash reserves, which is defined as money needed to cover expenses if inflows suddenly stopped.

Restaurants typically hold the smallest cash buffers, with just 16 days of reserves, while the real-estate sector boasts the largest, at 47 days.

Small businesses looking to expand (or at the very least stay afloat) are finding it hard to build up reserve cash, with daily income exceeding expenses by only $7, according to the JPMorgan study.

The findings in the report arrive as optimism in small businesses begins to stagnate. The Small Business Optimism Index, maintained by the National Federation of Independent Business fell 0.2 percent in August. Currently, at 94.4, the index is well below its 42-year historical average (98.0).

Political Uncertainty Weighs

According to a chief economist from Bloomberg Intelligence, another expert quoted in the Bloomberg News story, political uncertainty stemming from the upcoming presidential election could be adding a little extra distortion to the current outlook on the small business sector.

Nearly 40 percent of the small business owners surveyed did cite political uncertainty as one of their biggest reasons for delaying expansion. That number represents an all-time high.

The JPMorgan Chase Institute says that it hopes small business owners focus more on factors over which they have control, rather than regulatory changes, taxes, and other things that are out of their hands.

JPMorgan’s advice to small businesses? Focus on having a clear sense of your liquidity picture. That’s the factor that is likely to have the most immediate impact on their livelihoods that they can act on.

Get in the Game with Capstone

For qualified clients, Capstone provides purchase order factoringsingle 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 about our services and how we serve small businesses, please visit our homepage.

Small Banks Get a Big Break - Capstone Financing

Small Banks Get a Big Break

10:37 29 September in Blog
153

Banks with less than $250 billion in total assets may soon be seeing a relief in their federal obligations. A proposed alteration from the Federal Reserve could mean that smaller regional banks who do not conduct significant nonbank or international business would be exempted from certain parts of the “stress tests” on their economic resilience.

Issue Background

2010’s Dodd-Frank Financial Reform Bill compels any banking institution with over $50 billion in assets to undergo yearly assessments designed to measure their viability against periods of financial stress. The ultimate goal is regularly ensuring that the system is strong enough to withstand widespread economic turmoil like that seen in 2008’s Great Recession.

The tests encompass a wide variety of stressors, from overall adequacy of the organization’s capital to structural stability to whether planned capital distributions are viable in a variety of scenarios. This is a rigorous and exhaustive process that can take up significant staff time and organizational funds.

More than 30 banks across the country take this test every year, but for smaller institutions, the cost outlay can be significant — particularly for those close to the $50 billion line. In a recent statement at Yale University, Federal Reserve governor Daniel Tarullo indicated that the organization would be moving to a more risk-sensitive, customized testing model.

Model Alterations

Tarullo’s statement indicates that banks that fit the aforementioned criteria (greater than $50 and fewer than $250 billion dollars in assets, limited international or nonbank business) would be exempt from the “qualitative” portion of the stress test, which deeply investigates the organization’s risk-management systems. However, all affected banks will have to demonstrate that they can survive a potential recession with adequate capital reserves to maintain lending operations, as well as additional scrutiny around mortgage and money-laundering rules.

Systemic Importance

The Fed is also reportedly considering a separate proposal that would raise the capital requirements for banks considered “systemically important.” In short, the modifications aim to create regulatory measures that are more stringent for financial organizations of greater importance, while relaxing non-essential requirements for smaller firms.

Single Invoice and Full-Contract Factoring from Capstone

For qualified clients, Capstone provides purchase order fundingsingle 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.

S&P 500 Profit Slump Extends into Sixth Quarter - Capstone financing

S&P 500 Profit Slump Extends into Sixth Quarter

09:53 16 September in Blog
152

Expectations are falling, and the idea that the third quarter would mark the return to growth for U.S. companies has fallen flat. Companies in the S&P 500 will report earnings in the coming weeks, and the expectation is that they will once again report declines. The current slump of 6 consecutive quarters of shrinking earnings is the longest since FactSet began tracking the date in 2008 – leading many in the market to wonder how long stocks can rise while corporate earnings continue to fall.

Some Improvements, but Not Enough

Two factors – failing oil prices and a strengthening dollar – that have hurt corporate earnings in recent years have subsides in 2016, yet the recession in earnings continues. Despite the slight uptick in oil prices, the energy sector is expected to report the largest year-over-year decline in earnings of all S&P 500 sectors – a whopping 66% drop.

Stock Prices & Earnings: The Disconnect

Although earnings have dropped steadily, stocks have remained on a near-unprecedented bull run. This oxymoron can be explained by revised expectations: by lowering earning expectations shortly before they are released, analysts give companies a better chance to beat expectations. Investor confidence rises, money flows in, and the stock price continues to rise, even though the company did not really outperform expectations. Another factor that has kept this atypical bull run on track is the (in)activity of the central bank, which has not carried out any of the four planned interest rate hikes that were scheduled for this year.

Market Explanation

Faced with a situation where the entire market — not indices and individual stocks – is overpriced, many investors now point to quarter four as the turning point. They point to the fact that the market is hovering near all-time highs as evidence that a resumption of earnings growth is right around the corner.

Accelerate Your Working Capital with Capstone

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.

Made in USA - Capstone Financing

Indianapolis Manufacturers Express Concern Over Presidential Trade Platform

16:03 15 August in Blog
166

In a state where manufacturing is an economic support beam, Indiana businesses are growing more and more concerned over the presidential race’s implications for trade.

Former IN Governor Mike Pence ran his 2012 gubernatorial campaign on a strongly pro-trade platform and voted for every available free trade initiative during his House of Representative’s tenure. However, his alliance with presidential running mate Donald Trump — who has strongly condemned international trade agreements — now has businesses skeptical of his commitment to their interests.

The other side of the aisle presents little comfort, given Democratic nominee Hillary Clinton’s recent sharp trade critiques. In an August statement to The Indianapolis Star, local international sales manager Nate LaMar expressed a concern that both presidential candidates wanted to “turn back the clock” on trade systems.

The big question is this: what impact would revisions to long-standing international trade deals like NAFTA have on small businesses and manufacturers – especially those in states like Indiana.

Local Economics to National Concerns

Indiana has the highest distribution of manufacturing professionals in its workforce among American states. It also owes a great deal of its post-Great Recession recovery to a rebound in exports in products like pork, corn, and soybeans. Economists say that the state’s high level of factory competitiveness led to this advantageous performance after the North American Free Trade Agreement (NAFTA) opened up Mexican markets.

Changing Tides

Pence’s pro-trade convictions have taken on some damage in recent months, beginning with Indianapolis heating giant Carrier Corp.’s relocation to Mexico. After accepting the Republican vice-presidential nomination, Pence receded from his previous stance: he has now backed away from both NAFTA and the Trans-Pacific Partnership (TPP), an agreement that would lower trade barriers between America and a host of nations. For Indiana exporters — many of whom are owned or invested in by Japanese entities — this reticence signals a worrying lack of concern for his former constituency’s best interests.

Pence explicitly distanced himself from the TPP on the Laura Ingraham radio show, stating that it was time to “rethink” NAFTA’s implications and “hit the brakes” on TPP, dealing with Asian and Pacific Rim countries on a case by case basis to “promote growth.”

As a more “isolationist” wave sweeps the nation, manufacturers across the country will have to hope for the best, but prepare for the worst. For now, all eyes are on the presidential election.

Accelerate Your Working Capital with Capstone

For qualified clients, Capstone provides single invoice factoring, purchase order 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.

Number One Threat to Long-Term Economic Growth - Explained by Capstone

This is the Number One Threat to Long-Term Economic Growth

12:10 07 August in Blog
236

Amid positive job reports and a surging stock market, one factor still presents a major obstacle to long-term economic growth in the US: a persistent slackening of productivity. We are currently in the midsts of the longest downward slide in worker productivity since the 1970’s, an unfortunate asterisk that should accompany the latest round of job reports. It’s also likely to keep the Fed from raising interest rates any time in the near future.

Productivity by the Numbers

Productivity — the measure of what goods and services a worker produces each hour on the job — fell 0.5% at a seasonally adjusted rate during the second quarter, according to the Labor Department. That marks the third consecutive quarterly drop in productivity, the longest streak since 1979. What’s worse, the trend shows few signs of abating; productivity growth rang in at just 1.7% from 2007 to 2015, half that of 2000 through 2007.

Why Worker Productivity Matters

For business owners, the importance of worker productivity can’t be understated. The equation is simple: less productivity means more expenses and less profit. On a macro level, productivity is a key gauge in measuring wage growth, prices, and overall economic output — which have all been falling as well.

What’s Killing Productivity?

According to numerous studies, lagging productivity has several culprits. Among the most important are businesses unwillingness to invest in new equipment, machinery, and equipment — the raw materials that translate directly into job growth, wage growth, and gains in worker efficiency and productivity. While the exact cause of lagging productivity is difficult to nail down, it’s worth noting that fixed nonresidential investment, the meat and potatoes of business spending, has also dropped the last three quarters along with productivity.

That lack of investment has lead to a decline in new orders for nondefense capital goods on a year-over-year basis for much of the last year and a half.

What’s the Solution?

As we mentioned in our most recent blog, the majority of US manufacturers are small businesses — and many find themselves sorely lacking the working capital needed to invest in their businesses, jump-start productivity, create backlogs, and grow. As a low-risk remedy, manufacturers and other small businesses with strong demand for their products use invoice factoring to boost their cash flow. That’s where Capstone can help!

Grow Your Business with Capstone

For qualified clients, Capstone provides purchase order factoring, single invoice 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.

About US Manufacturing - Capstone Financing

4 Things You Didn’t Know about US Manufacturing

09:37 15 July in Blog
171

As we discussed in a recent blog, US manufacturing is alive and well—despite what many people may think. Following up on that piece, we are happy to give yet another positive update from the manufacturing sector.

The stars have aligned for US manufacturing in July, with domestic demand strengthening and offsetting the relative strength of the US dollar. US manufacturing activity hit a 9-month high in July, dispelling fears that the UK’s decision to leave the EU would hurt the already poorly performing sector. Factors that are boosting US manufacturing activity include a strong housing market, strong automobile demand, and solid consumer spending: all of which help to increase spending on manufactured goods.

US Manufacturing: Down and Out or Just Different?

It’s true that today’s manufacturing landscape is quite different from that of 1950. It’s even changed significantly since the year 2000, having shed 5 million jobs since the turn of the century. But what many people don’t realize is that it’s not only US manufacturing that’s being transformed. Technological advancements have made it possible to increase production with fewer workers. The end result is a strong (albeit much quieter) manufacturing sector that increasingly relies on tools like invoice factoring to increase working capital and expand business.

Surprising Facts about US Manufacturing

Here are four things you probably didn’t know about US manufacturing.

  1. Most US manufacturing firms are small; 75% have less than 20 employees, and 99% have less than 500.
  2. The US boasts 12 million manufacturing workers —9% of the entire workforce
  3. The average manufacturing worker earned over $4 more an hour than the US average — $25.58 compared to $21.32.
  4. Many manufacturing companies use invoice factoring to boost cash flow and expand their business

Boosting Working Capital with Capstone

For qualified clients, Capstone provides single invoice and contractor 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.

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.

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