Safeguard Future Growth for Your Small Business in this Booming Economy

05:26 31 December in Blog, Business Funding

 

During times of strong economic growth, it is easy to lose sight of the fact that eventually, we will see a slow-down. There are some steps you can take today which can help you during the next economic downturn by taking advantage of the current booming economy.

Tackle Your Outstanding Debt

One of the best ways to prepare for the inevitable downturn in the economy is to take care of your debts while the economy is booming. Handling your debt now can help prepare you when business starts slowing down. You will be in a better financial situation if you have less debt.

Consider Upgrading Equipment

Every business depends on their equipment operating successfully to meet customer demand. If you have business equipment which is no longer operating at peak performance, this is the best possible time to consider upgrading. Whether you lease or buy, upgrading will prepare you to better meet your customer’s needs.

Review Your Business Plans and Goals

If you have not recently reviewed your business plan, this is the ideal time to undertake that task. You should be looking at how you have met the goals you initially laid out, and if you have missed any of those goals, determine why. This is also a good time to review your plan for possible diversification opportunities. Keep in mind, the more diversified your offerings, the more likely you will to thrive in a future recession.

Hire the Best Talent

Today, while your business is facing a strong outlook is the time to find the right talent you may need tomorrow to continue to grow your business. This is particularly important if your business goals have changed slightly. Since the labor markets are tight, this process may take longer than you think.

Explore New Opportunities

This is a great time to increase your marketing and expand your footprint. During a booming economy, you can identify new markets, new customers and begin negotiations. Each of these steps will help you increase your business and safeguard your future growth.

Do an Internal Processes Audit

Take advantage of the booming economy to see where you can improve your business processes. The time you spend today to make sure you are maximizing production while maintaining the highest level of quality can help ensure that when the inevitable slow-down occurs, you are positioned as a leader in your industry.

Position Yourself for Future Funding Needs

Even though you may not need funds to manage your cash flow today, you can prepare yourself for the future. One of the biggest pitfalls to business growth is having access to the capital you will need. While you are encouraged to pay down debt during an economic boom, you should plan for your future funding needs during the same time period.

You may be unaware you do not have to take on new debt in order to finance future business growth. In fact, there are numerous options you can use including invoice factoring, purchase order financing, and more. Since you will be hesitant to take on new debt once business slows down, now is the right time to begin preparing for your future capital needs.

Capstone Capital Group has a dedicated team committed to helping businesses achieve their goals. We can help with a range of financial solutions and help you take advantage of the opportunities you have during a booming economy. We can also help provide solutions which will help you through periods of slow growth when cash flow is challenging. Remember, a booming economy will not last forever. You can take steps today to ensure when this latest boom starts slowing down that your business will be prepared.

 

The Fed’s Answer to U.S. Economic Growth: Let Them Have Loans-With Little to No Risk

15:27 17 November in Blog
In a recent move by Washington to stunt economic growth, Washington agreed to a two-step strategy.  The first step involves Fannie Mae bringing back low and no money down mortgages. The second step would be to discourage business loans.
 
A few weeks ago, Mel Watts, the Director of the Federal Housing Finance Agency, discussed plans to bring back low down payment options for government backed mortgage loans.  In some cases, allowing down payments as low as 3%.  Mr. Watts also suggested other initiatives to expand credit that critics fear may lead to another real estate boom and bust scenario. 
 
Additionally, the banking regulators and the Federal Reserve just approved new rules for “private” mortgage-backed securities.  The proposal wouldn’t require underlying loans to have any down payment at all.  In an ironic twist, the 2010 Dodd-Frank law was enacted to ensure that everyone has “skin in the game”.  However, with the new rules enacted by regulators, it would seem no one is required to have any skin in the game.  The new rules will allow borrowers to put no money down and will also allow them to have high debt-to-income ratios – as high as 43%. 
 
The new rules will allow creators of mortgage-backed securities to bundle pools of the above-mentioned loans and sell them on the secondary market without having any risk of credit.  Without any reform, investors would be duped into believing the risk isretained by the mortgage bond sellers and that these mortgages are safe.
 
In yet another part of the new rules, regulators forced risk retention for so-called leveraged loans.  These loans are made by banks to heavily indebted companies.  They do carry the risk which does not disappear when loans are bundled together. These bundled loans are what is termed collateralized loan obligations (CLO). What is even more surprising is that with these loans regulators mandated a 5% credit risk retention on the buyers of these loan pools.
 
While leveraged loans didn’t have anything to do with the financial crisis, the Fed’s reasoning for discouraging risky business loans is twofold.  Along with the Fed’s campaign justifying “risk retention”, the new regulations may offset distortions in the credit market from experiments in monetary policy engaged in by the Feds. 
 
Nevertheless, some experts believe the solution to all this would be to start raising rates for everyone, and not just certain classes of assets.  Another thing would be for judges to make certain provisions of Dodd-Frank are not applied o CLO managers in ways not intended by Congress.
 
The above should give the new congress something to think about, and the incentive to re-write certain provisions of Dodd-Frank, beginning with the repeal of the provisions regarding “risk retention”.
 
As regulators continue to enact rules making business loans more difficult to obtain, Capstone Capital Group, LLC has the solution. Capstone has been assisting small to mid-sized businesses for years.  They can help your business obtain the necessary working capital you need to help sustain and grow during uncertain economic times.  This is accomplished without all the red tape you would normally get from most banks.  Capstone specializes in Purchase order factoringSingle Invoice Factoring (“Spot Factoring”) and is geared towards firms in need of immediate cash. Spot Factoring is an alternative to business financing in that it provides no contract invoice selling, with flexible terms, in exchange for working capital from Capstone Capital Group.  Give Capstone Capital Group a call today at (212) 755-3636 to find out how we can help your business grow and succeed.

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