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

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

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

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.

Novel Way for Subcontractors to Find Financing from Capstone

A Novel Way for Subcontractors to Find Financing

20:13 11 May in Blog

Novel Way for Subcontractors to Find Financing from Capstone2015 was a picture-perfect year for construction, a banner year for the post-recession. Yet in 2016, many contractors in the United States are struggling to find financing for construction projects.

The lack of financing has been a reality even over the past several years with the economy recovering by leaps and bounds. It was a reality throughout the housing crisis and even prior to the recession when construction and development were booming. Contractor business financing has been a struggle, but it’s clearly nothing new.

Banks’ Aversion to Construction Financing

Banks are perennially gun-shy when it comes to lending to construction firms. They cite the industry’s volatile revenue fluctuations, the unpredictable nature of construction, contractors’ sensitivity to economic cycles, and excess competition as reason to stay away. The recent failure of several prominent construction firms has only strengthened banks’ resolve to avoid offering lines of credit to construction firms, contractors and subcontractors.

Contractors & Underwriting Issues

Steady bank relationships are often out of reach for construction firms with a poor ratio of accounts receivable to accounts payable and limited liquidity in working capital. But when construction firms and contractors struggle to find financing, subcontractors tend to suffer even more. Banks are hesitant to allow subcontractors’ bonded accounts receivable to serve as collateral for lines of credit, and those who primarily engage in bonded work often find it difficult or impossible to provide additional collateral.

Is there any hope for subcontractors in today’s construction industry?

Factoring: A Solution for Subcontractors

Factoring is a finance technique that allows a company to leverage its accounts receivable and accelerate its working capital through the sale of its accounts receivable to a third party. Specifically, a factor gives a business an advance on a customer invoice — generally between 70 to 90% of the invoice amount – so they can create a backlog of work without equity or debt financing. As the company improves their balance sheet, they increase the likelihood of receiving a traditional line of credit from a bank.

Seize Opportunities for Growth with Capstone

For qualified subcontractors, Capstone offers contractor financing and provides a single invoice and full-contract factoring for work performed under contract with a creditworthy general contractor. Capstone has highly experienced construction professionals on staff to facilitate the purchase of construction-related accounts receivable. To learn more about our contractor business financing and other services, please visit our homepage.

Action on Climate Change Boosts NY Construction - Scope explained by Capstone

Action on Climate Change Boosts NY Construction

21:33 15 March in Blog

Action on Climate Change Boosts NY Construction - Scope explained by CapstoneNew York State has experienced much warmer temperatures over the past thirty to forty years, and the sea level along New York’s coast has increased about 12 inches over the past 100 years. Though past trends do not necessarily predict future trends, New York officials are indicating with their investments that a real threat exists.

The threat of rising sea levels has stimulated construction and infrastructure investment across the world, but nowhere has that investment been greater than in New York. A recent article in the Wall Street Journal cited a University College of London study that found New York City outspends all other megacities in countermeasures to rising sea levels, with $2.2 billion alone in the last year.

The predicted challenges of climate change would affect many sectors including water, energy, communication, and transportation—and this means that New York construction firms, contractors, and subcontractors would be a key part of the solution.

Infrastructure Challenges and Construction Opportunities in New York

The Responding to Climate Change in New York State report (ClimAID) published in 2014 identifies numerous transportation, water, and architectural challenges that could impact New York. It also identifies solutions to these challenges—and all of them suggest a significant increase in construction investment in the coming years.

Infrastructure Challenges

• Increased strain on road surface materials
• Stress on electricity grid
• Delays in railroad schedules
• Sagging of large bridges
• Decreased clearance on waterway bridges
• Traffic and public transportation delays
• Reduced building lifespan
• Increased impact of ships and barges

Construction Opportunities

• Convert water managers to handle large variability
• Install more pumps, water tanks, and filters for water supply systems
• Install leak detection systems, low-flow devices, and rainwater harvesting systems
• Upgrade combined sewer and stormwater systems
• Relocate aging infrastructure out of flood-prone areas and construct levees and berms
• Replace old transformers and wiring with heat-resistant models
• Increase seat length of expansion joints on bridges and lengthen airport runways
• Increase capacity of drainage systems and culverts
• Invest in permeable road surfaces and regrade slopes to direct runoff away from roads and tunnels
• Move communication cables underground

What Does it Mean for You?

New York is directing around $20 billion of local, state and federal funding to complete numerous long-term construction projects designed to mitigate the effects of climate change. Half of that money will go to coastal protection and urban drainage projects, which means huge opportunities are on the horizon for general contractors and subcontractors.

Single Invoice Factoring for Qualified Subcontractors

For qualified subcontractors, Capstone provides single invoice factoring for work performed under contract with a creditworthy general contractor. Capstone has highly experienced construction professionals on staff to facilitate the purchase of construction-related accounts receivable. For more information, read our blog, visit Capstone Capital Group homepage, or contact us today.

Booming Rent to Continue explained by Capstone

Builders Betting on Booming Rent to Continue—Should They?

22:47 22 January in Blog

Real estate investors are betting, perhaps mistakenly, that the six-year trend of rising rents in luxury urban apartment units will continue. Likewise, developers are hoping it will be worth their time, and money, to continue building them. According to research conducted by Axiometrics Inc., developers have built nearly 900,000 new urban apartment rental units over the past three years. This number is expected to climb by roughly 100,000, over the next three years, approaching one million new apartment units.

The Numbers

There were 328,000 multifamily apartment units built in 2014, the most in any given year in the past 30 years, according to Jed Kolko at the Terner Center for Housing Innovation at Berkeley. Since early 2010, rents have increased by over 20%. In 2015, real estate research firm Reis Inc. reports that, nationally, average rents rose by 4.6%. Demand for apartments remains high, and economists generally expect this trend to continue through 2016. But all this construction may correlate poorly with actual demand. Contractors are overwhelmingly focused on the higher end of the market, and many new multifamily properties being built are only affordable to renters making twice to four times the median income in their area.

Developers Flocking to High-End Construction

Many contractors that have previously worked in other market sectors have now moved into luxury multifamily urban apartments. Whether their background was in single-family homes, office buildings, or retail space, many have been drawn by the promise of huge profits from luxury, high-rent buildings.

Doubts in the Industry

Though optimism in housing is high at the moment, some contractors aren’t confident that the bull market for luxury apartment will continue much longer. “People are working against the clock right now,” said Jaime Lee, CEO of Jamison Realty Inc. “We’re coming to market as quickly as we can.” Lee thinks the market could start to slow in the next few years, which is an expectation shared by many economists. Statistics show that vacancies in the suburbs are declining, even as vacancies in certain urban areas have begun to rise. This trend may indicate that people are starting to feel the effects of high rents and are now looking outside of cities for housing.

The demand for new apartments is very real, but new construction, by focusing on the higher end of the rent spectrum, might have drifted too far from the typical renter’s budget.

Working with Capstone

For qualified subcontractors, Capstone provides single invoice factoring for work performed under contract with a creditworthy general contractor. We have highly experienced construction professionals on staff to facilitate the purchase of construction-related accounts receivable factoring. For more information, visit our homepage, or contact us today.

Spring Brings ‘Spec’ Homes

Spring Brings ‘Spec’ Homes

21:54 03 February in Blog

Though winter is still upon us, builders are betting on a strong spring with speculative, or ‘spec’ homes. The construction of such homes is already underway with home builders getting a head start. Speculative homes are homes built without a buyer in place. The advantage of ‘spec’ homes to home builders is the assumption that the wind carrying recent sales will blow into the home purchasing season of spring.

Spring Brings ‘Spec’ Homes

Going into 2015, over 200,000 homes under construction or recently completed were listed for sale by home builders, according to the data released by the Commerce Department. This number is a 17.2% increase from 2014, signifying optimism amongst builders for spring home sales. Since June 2008, the sales of new homes this past December were the highest they’ve been.

With the Super Bowl marking an end to football season and a start to the spring home selling season, builders are prepping ‘spec’ homes for sale. As traction around selling speculation homes grows around March and April, more communities will be opened by builders for a promising spring home selling seasons.

Capstone Capital Group, LLC. Understands the importance of the spring home selling season and the growth it means for the home building industry. For years, we have helped organizations get the immediate cash they needed without the typical red tape that most banks require. For more information about Capstone and our Single Invoice Factoring, purchase order factoring give us a call today at (212) 755-3636 and speak to a representative.

Construction Spending is Booming in New York Amid Certain Challenges

17:50 12 September in Blog

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 (212) 755-3636.

Get In the Game!

19:00 06 March in Blog
Last week, we wrote a funding support letter for one of Capstone Capital Group, LLC’s clients who submitted a bid on an opportunity with the Port Authority of New York & New Jersey (“Port Authority”).  The company submitted their bid along with a letter of funding support to prove to that they had sufficient access to capital to complete the work.  The company unfortunately lost the bid to another firm who submitted a bid at 50% of the company’s bid.  As a public institution, the Port Authority has to take the lowest bid, but it is not practical for one union contractor to under bid another by such a large margin.  The client was not disappointed by losing the bid because the company bid the work at their best price and at a gross margin that would ensure the survival of his company, which is a fair way to conduct business.
The client is “in the game” because they have a construction factoring facility with Capstone.  The owner is positive about the company’s future because he knows he has the skills to provide customers with the best construction services available in the market along with funding to grow the business.  The client was also aware that this is one of many bids the company will be participating in. 
There is no point in taking low margin work that will hurt your company in the long run.  Many contractors submit low margin bids during slow periods to keep cash flowing and to keep employees on jobs.  The end results are:
·        increased accounts payable
·        liens on jobs
·        an overall loss of reputation 
This happens time and time again. 
At Capstone, we have a policy:
If the gross margin on a job is too small, the related accounts receivable will not be factored. 
Why does Capstone do this?  It is only a matter of time before the owner of the project puts their foot down and stops paying due to the use of substandard materials or workmanship.  There is no opportunity for the client to come out of the job stronger than they went into it without sufficient profit.  Accordingly, if the client cannot make money Capstone will not want to participate in a transaction that will result in a loss of capital even if we get paid in full.  It is not good business for the client or for Capstone!
We have observed that many disadvantaged business enterprises (DBE, MBE, WBE, etc) flounder following the receipt of their designation from the respective state or federal agency.  There is an expectation that work will come rolling in once the designation is granted. 
Without funding support from a working capital facility, an Invoice factoring facility or a company like Capstone, who understands their business model, disadvantaged business enterprises have limited options.  These entities are NOT in the game and are missing opportunities everyday. 
Get in the game! Find a Business funding solutions that will support your growth and bid on opportunities within your skill set.  Opportunities will be won and lost however you’ll always be able to deliver the highest level of service or product possible.  The frustration will be replaced by exhilaration due to company growth.
Take that first step and Get in the Game!

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