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.

Construction Loans on the Rise Says FDIC

04:57 19 September in Blog

According to recently released figures by the FDIC, outstanding construction loans for both residential and commercial projects increased to $223.2 billion in the second quarter. That is a 4% increase over the first quarter.

According to economists, the increase is due to the fact that lenders appear to be growing more comfortable extending credit, and the demand for credit is improving. Based on this, both residential and commercial construction should increase steadily moving forward. This is because the level of construction still remains low historically and vacancy rates are falling.

Vacancy rates have been declining in recent years. Since 2010, office building vacancies in the top 79 U.S. metropolitan cities have dropped slowly from their recent high of 17.6%.

Despite the small increase, construction lending has a ways to go to even approach half of its highs during the real estate boom. Homebuilders and lenders seem to agree the boost is slight, staying optimistic, as they have seen more banks of all sizes entering the construction lending space in the past 12 months.

It seems evident that one factor needed to revive the stalled home construction business is an increase in lending to builders. Home construction accounts for 5% of the U.S. gross domestic product but remains at 3.1% for the third consecutive year in this year’s second quarter.

Several factors which have impacted the new home market have been:

  • Shortages of lots and labor.
  • Stagnant wage growth for would-be home buyers.
  • Higher new home prices have steered some potential buyers to the cheaper resale market.

Nevertheless, the construction market seems to continue to gain steam, albeit slow, and according to some, banks seem to be a bit more aggressive at chasing the right deals which has helped loosen overall loan terms. According to Scott Laurie, chief executive of California builder the Olson Co. “It’s a good world today, the best it has been to be borrowing and building since the recovery started.”

With construction lending on the rise, it appears evident that more and more constructions jobs are slated to increase this year as well. Thus 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 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. 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 to obtain the necessary working capital they need to sustain and grow during uncertain economic times without all the red tape you typically 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 you and your business, visit us on the web at https://capstonetrade.com/, or give us a call today at (212) 755-3636.

Regulators Remain Unconvinced of Big Bank’s Ability to Safely Wind Down in a Financial Crisis

19:14 15 August in Blog
 As part of the 2010 Dodd-Frank regulatory scheme, banks are required to submit an annual “living will” detailing, among other things, the bank’s operations and exposures, in addition to a plan of how the bank could be dismantled without relying on tax payer funded support in the event they reach a point of potential failure during a financial crisis.
 
After a review by the Federal Reserve (the Feds) and the Federal Deposit Insurance Corporation (FDIC) of recently submitted bankruptcy plans of eleven of the nation’s largest banking institutions, the Feds and the FDIC chastised the plans as being “unrealistic or inadequately supported” and that the plans “fail to make, or even identify the kinds of changes in firm structure and practices that would be necessary to enhance the prospect for an orderly failure.”
 
Regulators set a time frame for these banks to address the apparent deficiencies in their plans by July 2015 or face tougher capital requirements, growth restrictions, and even go so far as to break up the bank if they are unable to make significant progress. 
In order to avoid harsher rules and possible dismantling, regulators say banks can take steps to make their bankruptcy plans by establishing a rational and less complex legal structure, essentially showing they can quickly produce reliable information about their exposures, and amending derivatives contracts to make them easier to bring through bankruptcy. 
 
These actions by regulators gives a clear sign they believe that banks aren’t doing enough to insulate themselves and protect the tax payer in the event of a future financial crisis. With increased regulation and scrutiny looming over the banking industry, which isn’t likely to ease up any time soon, banks are feeling the pressure to restrain growth by curbing lending practices.
 
 Some borrowers, like small business owners, may have a more difficult time obtaining the necessary financing they need to maintain and grow their business.  Unfortunately, the focus on unwinding banks and compliance with regulations takes away resources that can be used to help finance small businesses.  Capstone Capital Group, LLC has funding solutions that can get you the financing the big banks can’t provide. 
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 Business finding solutions, 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.

 

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