Small Businesses Feel Uncertain About the Future

The National Federation of Independent Business (NFIB) is an advocacy group for small businesses that consistently surveys its members to get a reading on the current business climate from small businesses. Currently, around 325,000 small business owners are members of the organization. While the group is clearly political in nature, its surveys can help provide some insight into the state of small businesses.

The Uncertainty Index

One of the surveys the group does is called the Uncertainty Index. The goal of the Uncertainty Index is to determine how business owners feel about the future. According to the group’s 2016 Small Business Problems and Priorities survey, two of the biggest concerns for small business owners are uncertainty about the economy and government actions.

NFIB defines uncertainty as “the inability to anticipate the outcomes of important future events which are critical to planning and forecasting for the firm.”

Shortly before the election, the uncertainty index rose to a 42 year high as business owners were clearly unsure of the path the nation was about to embark on and what it could mean for the economy. In March, the Uncertainty Index remained high at 93, its 2nd highest level since it was first measured.

To measure uncertainty, the NFIB calculates how many business owners answer “I don’t know” or that they are uncertain to six questions from the monthly Small Business Economic Trends Survey. These six questions focus on business expansion, thoughts about business conditions in the future, sales expectations, employment planning, the ability to procure financing in the future, and whether they may make capital expenditures in the following three months.

Beat Uncertaining with Planning

While some aspects of uncertainty cannot be tackled—business owners will always be faced with some form of ambiguity—planning can help small business owners better prepare for any issues that may arise.

One way to help business owners tackle uncertainty they have about the future is through investigating funding options. Question five specifically states, “Do you expect to find it easier or harder to obtain your required financing during the next three months?” Too many business owners may interpret this question as dealing with bank financing or credit cards. While it is clear that banks do not make many loans to small businesses and that small business lending has been down, there are other options available.

For companies that invoice for their services after a job is complete, factoring may be a useful financing method. Construction companies and contractors frequently use factoring to help ensure they have the capital to cover supplier costs and payroll. There are multiple different types of factoring. To learn more, visit our website or contact one of our skilled representatives.

Manufacturers and subcontractors may be eligible for purchase order financing, which is used to finance the purchase or manufacture of goods that have been presold. By focusing on the creditworthiness of the buyer, a financing company can help newer businesses establish themselves as they take on more clients and provide the necessary capital to ensure the product is delivered as specified.

The future of small businesses doesn’t need to rely on the banking climate. While there will always be a measure of uncertainty (it’s just a part of doing business, after all), being aware of one’s financing options can help alleviate the stress that comes with not being able to know the future.

If you’re interested in learning more about factoring or purchase order financing, reach out to one of our skilled representatives today.

Bringing Manufacturing Jobs Back Requires Investment

Buying American made goods is becoming popular again across the country, however, finding them isn’t always easy. For manufacturers intent on capitalizing on the rising trend and filling the need, reshoring is often necessary. But reshoring isn’t easy—or cheap. Thankfully, private financing companies are helping fill the funding gaps.

The Hidden Costs of American Manufacturing

For companies interested in relocating more of their manufacturing activities to the U.S., whether to capitalize on the Made in the USA trend or to reduce production and shipping times, there are some issues that must be planned for adequately. In addition to the financial costs of moving or purchasing equipment, leasing new space, and hiring staff, it can also take a while to find adequately trained employees, increasing the length of time it will take to get a plant up and running.

To date, those companies that have been able to reshore more easily are those who have an established network of U.S. suppliers and have found that their production activities have been simplified thanks to the move. Companies that require skill sets that have experienced a talent shortage in the U.S. will either need to first locate schools that continue to train in those skill sets or a pool of individuals with interest in being trained in those skill sets. The textile industry and other industries that offshored their activities decades ago are hardest hit by this talent shortage.

With the added expense of either comprehensive talent searches or additional training, many companies are still looking at reshoring. Ensuring there is enough cash flow to find the right staff with the right skill set or to purchase the appropriate equipment can be difficult, however.

Smaller Firms Hardest Hit by Move

According to a 2016 survey by AlixPartners LLP, almost 70% of European and U.S. manufacturers and distributors are considering relocating their production operations closer to home. Even those companies that have limited funds for moving (primarily, smaller firms) are interested in reshoring. For these smaller firms, however, it is imperative that the move be successful and that all possibilities are planned for and properly executed upon. Their smaller budgets require strict budgeting and thorough researching of the talent pool. These firms can be helped by discussing their needs with a private business funding company.

Financing Manufacturing Activities

While bank lending activity remains low in spite of a healthy economy, other financing options prove promising for manufacturers in need of cash flow. Purchase order financing and factoring continue to provide manufacturers with the capital they need to sustain and grow their businesses. Partnering with a reputable private financing company such as Capstone Capital Group gives manufacturers the ability to actively craft their futures and plan for better, more efficient production methods.

If you’re thinking of reshoring and are interested in how PO financing or factoring work, consulting with a trained specialist at Capstone Capital Group should be your next step. Give us a call or visit or website to learn more.

Will Project Scalpel Affect Small Business Lending?

“Project Scalpel” shows that banks are still focused on cutting costs. As a business measure, this seems reasonable and plenty of business owners can probably relate to the desire to cut overhead and to trim costs wherever possible. But what could this mean for businesses wanting to borrow money? Will big banks’ desire to reduce costs lead to tighter lending requirements?

What is Project Scalpel?

At its most basic, the so-called Project Scalpel is about sharing information to help remove redundancy and allow banks to save money since they won’t have to each reinvent the wheel and maintain duplicate systems. Essentially, large banks such as Bank of America and Goldman Sachs are looking to collaborate to cut back on back-office expenses. Now, these cost-savings measures are focused on stock processing and bond transactions, but it isn’t a stretch to imagine how banks may turn a lean fiscal eye to lending.

After the recession, most large banks cut back on lending to small businesses. While it was already difficult to secure funding in this manner, business owners saw this funding source dry up before their eyes. While the economy has bounced back by most measures, lending to small businesses has only improved marginally. Many small businesses have been left in the lurch and unless the banks see an increase in revenue to justify their small business lending practices, they may not have any justification for increasing their lending at a faster clip. After all, for big banks, small business lending is a risky activity that comes with little advantage. For business owners hoping to secure funding at a bank, often times, the hoops imposed by the banks are difficult to jump through and frequently not worth the trouble. Add to that the length of time it takes to process these loans, and for many business owners, the bank lending route is not an adequate solution to their financial needs.

Seeking Alternative Funding Sources

If banks do maintain the slow growth they’ve instituted in their small business lending activities or if they cut back, business owners must be ready to investigate other options for funding their business needs. These include using a personal line of credit, borrowing from family and friends, crowdfunding, and, depending on the industry, invoice factoring and purchase order financing, among others.

While investigating these various options, it is important for small business owners to inform themselves about the pros and cons before proceeding. For example, a personal line of credit may not offer enough funding and may have a high-interest rate attached.

Similarly, borrowing money from family and friends can create rifts in those relationships and may not be sufficient to help you meet your obligations.

Working with a business funding company such as Capstone Capital Group, LLC, and Capstone Capital Group, LLC can provide companies in particular industries with funding through invoice factoring or purchase order (PO) financing. Plus, Capstone’s funding is faster—and easier—than applying for a traditional line of credit at a bank. Capstone has had the pleasure of assisting numerous construction companies, distributors, manufacturers, government contractors, importers, and more, providing growth capital for their businesses.

At Capstone, we work quickly to help businesses maintain their momentum, meet their obligations, and grow. Don’t let a lack of capital slow you down. If you’re ready to investigate whether invoice factoring or PO financing may be a good fit for your business, contact Capstone Capital Group, LLC to learn more.

Factoring and PO Purchasing Help Where Banks Don’t

According to a recent study by sociologists and economists at Harvard, Stanford, and the University of California, almost half of all U.S. 30-year-olds make less than their parents did at their age. That’s a disappointing conclusion about income in America—one that has likely had an effect on entrepreneurial activity. Combined with banks’ reticence to lend money to businesses, gathering the necessary capital to create or sustain an enterprise has become increasingly difficult.

Thankfully, bootstrapping and business loans aren’t the only solutions for business owners. Capstone provides financial services to help grow and sustain small businesses. Depending on your business and cash flow needs, there are multiple options that may work for you. If you need assistance determining which may be best for your organization, contact Capstone Capital Group for more information.

Single Invoice Factoring

One way to acquire working capital is through single invoice factoring. With single invoice factoring, also known as spot factoring, a company essentially sells its invoice to a credit group at a slightly discounted cost in order to receive an advance.

For example, if you’re a government contractor who has completed work on an invoice that won’t be paid out until 30 or 90 days after job completion but are in need of working capital to purchase supplies for another job or opportunity, you can sell your invoice to a financier to receive a percentage of the invoice as an advance. The remainder of the invoice, minus a fee, is then paid out once the invoice is paid.

If approved, single invoice factoring results in quicker cash flow than a bank loan and can be easier to apply for. One an application is approved, this credit can be applied towards purchasing supplies, payroll costs, or other business expenses.

Single invoice factoring does not require a multi-year contract or future invoice factoring.

Discount Factoring

For organizations looking for a longer term relationship with a credit group, discount factoring may be more appropriate. Whereas single invoice factoring does not involve a multi-year contract and only deals with one invoice, discount factoring can include a contract and multiple invoices. For companies intent on growth, this may be a better option than single invoice factoring. However, the best way to determine whether this is the case is to speak with a credit group to learn more about their services and requirements.

Purchase Order Financing

When cash is needed so that a company can fill an order or complete a job, purchase order financing from a reputable credit group can fill the gap. With purchase order financing, the financier pays for the necessary goods or for a portion of them. When the end buyer pays for their goods, that payment goes directly to the financier who keeps their fee and then sends the balance to their client.

Purchase order financing is extremely useful for subcontractors such as electricians, roofers, and architects.

As they attempted to quantify the American Dream, the researchers mentioned at the beginning of this article weren’t able to define direct factors for the decline in upward mobility. They did, however, imply that an economic slowdown and a widening income gap could be at fault. Whether this will change anytime soon is uncertain.

For those who have struck out on their own to create businesses, this stagnation doesn’t have to put your business in a holding pattern. While many turn to the banks in hope of SBA loans, it’s important to note that Capstone Capital Group provides the financial services necessary to help small businesses excel and succeed.

Regardless of Economic Forecast, You Have Options

Last year’s economic growth was a mixed bag. While it appears the economy has bounced back from the recession and unemployment continues to drop, GDP growth remains slow. In addition, the numbers aren’t telling the whole story thanks to inflation. What could this mean for businesses and how can business owners plan for the year ahead?

As mentioned, GDP growth remained around 1.7% throughout 2016. Meanwhile, it was touted that income for middle-class individuals rose to pre-recession levels. This sounds good on the surface, however, further inspection indicates that when inflation is taken into account, those same income numbers are actually lower than income figures from 2000. That means many people are still technically making less than they were before the recession.

For home improvement businesses such as roofing contractors and kitchen remodelers, this means some families may continue to forestall home-improvement projects. Those who have primarily bootstrapped their businesses may find it harder to maintain the necessary cash flow to keep the business afloat between projects. Likewise, those who are ready to expand may not have the necessary capital on hand to make that investment.

For many business owners, when cash flow issues arrive, thoughts may turn to banks and business loans. They may even find themselves perusing the SBA website to see if they are eligible for a grant or loan. Unfortunately, banks are still reticent to loan to small businesses. In addition, the process often takes too long and requires mounds of paperwork, from personal and business bank and income statements to a full-fledged business plan and projected earnings. Even SBA-backed loans are still being originated less frequently than they were before the recession.

When what matters is running your business and ensuring you have the funds to pay for your next project’s supplies, gathering a slew of business and personal tax returns and other banking documents may not be the thing top of mind. Especially when it’s unclear whether or not you’ll be approved for the loan and how long it may take to actually receive the money you’re requesting.

Thankfully, there are other options.

Bootstrapping and bank loans aren’t the only solutions for cash-strapped businesses. Credit groups or financing companies like Capstone Capital Group, LLC can provide a quick influx of capital for established businesses. Factoring and purchase order invoicing represent alternative funding methods that have become mainstream for businesses that are waiting for payment on completed work or who are in the process of manufacturing or delivering pre-sold goods and services.

A credit group that is in tune with the needs of business owners and the current economic trends can provide a safety net for businesses who need a boost between jobs or who are ready to take their operations to the next level. With the ability to lend money quickly, a private finance company like Capstone Capital Group, LLC can alleviate the financial burden placed on small businesses when they are waiting to receive payment on open invoices.

While it is not possible to predict our country’s economic future, it is important to be aware that you do have options outside of bank loans to help you grow your business. Call us today if you’re ready to take the next step to increase your access to working capital or expand your business.

How the Federal Interest Rate Increase Could Affect Small Businesses

For the second time in a decade, the Federal Reserve raised the target interest rate by 0.25%. The current range is now 0.5%-0.75%. Rates are still much lower than they were in the mid-2000s, though there is likely to be a series of gradual increases over the next couple of years.

For small business owners in need of capital, the question is, how will this affect your business?

What Does a Rate Hike Say About the Economy?

When the Fed raises rates, it is generally a positive commentary on the state of the economy. When rates were raised in December 2015, after 9 years with no increases, it was taken to be a sign of a growing economy. Specifically, continuous growth in the GDP and decreasing unemployment numbers help embolden the Federal Reserve.

This year’s rate hike is viewed as confirmation that the economy continues to be healthy. Recently published unemployment numbers showed an unemployment rate of 4.6%, a decrease, a 0.3% decrease from the previous month.

This is good news for small businesses. A good economy means consumers are more willing to spend. It allows for price increases if necessary and provides a positive outlook for the future. Consumers who have pushed off home projects, for example, may be more emboldened to hire a contractor now that the economy appears to be more stable.

Will Banks Lend More?

Higher interest rates on loans means banks will be able to make more on a loan. While the last rate increase did not appear to have a positive impact on bank lending for small businesses, there is a chance that the possibility for increased margins will encourage banks to originate more loans for small businesses. However, because so few business loans are currently being made, many businesses in need of cash flow will still be left behind.

This isn’t the whole picture, though. With an upcoming change of administration and discussion about deregulation, there is a chance that bank lending for small businesses will increase in the future. For those who are currently in need of capital, it is necessary and wise to seek other options.

Alternatives to Bank Loans

With a high rejection rate and a lengthy application process, applying for a bank loan or SBA loan can be disheartening and time-consuming. Thankfully, bank loans aren’t the only option for small businesses and contractors.

To stay competitive and fund growth, small business owners should investigate alternative options such as factoring and purchase order financing. Thinking outside the traditional “loan” model and investigating credit groups can provide opportunities to fund your business so you can focus on what you love to do and not how to pay for supplies.

Overall, this is only a small interest rate increase, and it is likely that 2017 will bring more. It’s unnecessary to worry, however, it is wise to plan to ensure your business will have the cash flow it needs to succeed.

If you’re ready to create a plan and learn more about single invoice factoring and purchase order financing, contact Capstone Capital Group. A trained professional will provide you with the information you need to determine if our services are a good fit for your company.