A Look back At 2018 Business Growth In America

13:13 23 January in Blog, News

During 2018, more than 70 percent of all small business owners reported a profitable year. While small business owners continue to face some struggles, this type of report means they are more optimistic going into 2019. Addressing some of the challenges they will face in the new year is a necessity. The two primary concerns facing small businesses going into 2019 is financing and securing qualified employees.

Addressing the Employment Gap

One of the interesting bits of information about small business formation is that the boomer generation continues to be the largest contributor in terms of opening small businesses. In fact, more than one-half of all small businesses are owned by someone over the age of 50. This means they must appeal to the younger generation, specifically the newest generation entering the workforce, Generation Z.

The current base of job seekers is more tech savvy than most of the prior generations given they have grown up in an environment dictated by technology such as smartphones. This generation also watched their parents struggle through the most recent recession, has more interest in a steady career path, and are more competitive than generations before them.

For small business owners, this can present many challenges including using the right tools to attract these qualified individuals and more importantly, retaining them once you have hired them. This will continue to be a challenge as more technology develops, however most Gen Z employees will remain within a company if they are well-paid, are enjoying job security, and working in an environment that embraces change and technology. Business owners will have to have a meaningful recruitment and retention plan for their business if they wish to continue thriving into 2019 and beyond.

Addressing the Financial Challenges of Small Businesses

Currently, about 37 percent of all small businesses are profitable. This is great news, but in order to remain competitive, businesses must have access to capital. During 2018, the Federal Reserve raised nominal interest rates four times, meaning interest rates are the highest they have been since January of 2008. While these increases may fairly represent a better economic outlook overall, it has increased the uncertainty associated with obtaining small business loans.

When interest rates increase, lending institutions tend to tighten their loan criteria. Additionally, the cost to borrow increases, even for many small businesses who are already carrying loans since these loans tend to have adjustable rates. Finally, higher interest rates often mean consumers spend less to meet their debt obligations. This means small and mid-sized business owners must find more creative ways to access the cash flow they need to sustain their businesses going forward. Cash flow allows a business to tackle the need to hire qualified employees, build up their inventory to meet increasing product demand, and increase their marketing to remain competitive. This is when Capstone Capital Group can step in and help you meet the challenges of financing head on.

Innovative Financing Solutions

Since no two business owners have the same financing needs, Capstone is proud of the fact they can offer a variety of services designed specifically to provide businesses with the capital they need to continue growing. Some of the programs offered include:

  • Invoice factoring
  • Construction Accounts Receivable Factoring
  • Minority business funding
  • Purchase order financing
  • Trade financing

Our goal is to find a way to help your business, which means finding a way to get to ‘yes’ when it comes to addressing your cash flow needs. We take the time to review your entire business model, understand your unique financing needs and put together a financing proposal that meets your needs while keeping you from taking on additional debt in many cases. Capstone Capital Group to review your company’s working capital requirements or get information about Capstone’s financial services, please contact us by filling out the form on our website. Alternatively, you may contact us directly at us at 347-410-9894 to speak with a representative today.

5 Things A Small Business Should Look For When Choosing A Brokerage

11:12 07 November in Blog, Business Funding

 

Small business owners often turn to brokers to help them secure financing. This can be beneficial because generally, a broker will have access to numerous sources of funding which can mean a higher likelihood of securing the funding you need to keep your business operational. Here are five things you should look for when choosing a brokerage:

1. Experience with Your Industry

In some instances, a broker will focus on obtaining financing for businesses which operate in only a few industries. While specialization can be positive, if you are working with someone to secure financing on your behalf, you want to confirm they have an idea of the challenges faced in your field.

Since every business has different challenges, you will want someone who can meet those challenges head on. For example, some industries suffer from annual work slowdowns because of weather-related issues. Others may have increases in work during the holidays. The brokerage you select should understand these nuances.

2. Proven Track Record

You should ask a potential brokerage to provide you with at least one, and preferably more than one reference. The last thing you want to do is work with someone who has no track record. Asking their previous clients about the work that has been done on their behalf is one way to ensure you are working with a brokerage you can count on for results.

While there are many start-up brokerages who will work hard to prove they can process new inquiries, this could cause delays in your ability to get the funding you need, in the time frame you need to have funds available.

3. A Menu of Products

One of the challenges when selecting a brokerage is finding out what types of loan products they offer. If your industry requires various types of funding, for example, loans, accounts receivable, and equipment loans, these are often handled by different types of lenders. Make sure the brokerage has the capacity to work with various lenders.

While some may feel limiting the number of lenders who work with a single brokerage, this could put you at a significant disadvantage. When these types of limitations occur, what happens is you must fit into a specific “box” or it is harder for you to secur

4. Investigate Fee Structure

Another key aspect of working with a broker is how they are making their money. While some brokers are paid a simple finders fee by the lenders they work with, others are adding their fees onto your loan request. This may be done in numerous ways including increasing the interest rate you are paying, adding points, or increased fees such as application fees.

Before you get started with a new brokerage ask about the fees they charge and ask how they are paid. This can be very important particularly if you are looking for a long-term relationship.

5. Communicates Well with Clients

One of the final things you should investigate when searching for a brokerage is their communications with clients. Securing financing in a timely manner is important if you are depending on funding to grow your business, sign a new contract, or hire a new employee. If you are not able to reach your account representative in a timely manner, there could be devastating results.

Finding a brokerage who meets your needs is important. At Capstone Capital Group, we take pride in the fact we work with both direct customers and with brokerages. We offer a wide variety of financing products which many brokers find helpful to meet the diverse needs of their clients. We also have a number of ways for both clients and brokers to contact us so you can rest assured, we will be here to answer your questions or address your concerns.

 

Business Optimism Index Increases Demand for Financing

05:49 07 August in Blog, Business Funding

Small businesses fuel the job market across the United States. Thanks in part to small business growth, unemployment is currently showing very low rates. According to the National Federation of Independent Business (NFIB), more businesses are considering increasing their hiring and increasing inventory. One of the challenges these businesses will face however is making sure their cash flow allows them to keep up with the need to invest in higher employment and inventory.

Increased Business Means Need for Increased Capital

One challenge faced by most business owners is the need to have capital on hand to increase their business. Businesses will find it impossible to increase inventories if they do not have the raw material available to do so, and hiring good labor requires an investment which may not produce immediate returns. This means more businesses than ever before need access to reliable sources of capital.

Despite the higher optimism index, and the fact banks are seeing more applications for loans than they have since the 2008 recession, the statistics on loan approval are dismal. Here’s a look at what is happening in the banking sector as far as loan approvals:

  • Big banks – defined as a bank with $10 billion or more in assets, big banks are currently only approving 25.9 percent, slightly more than one-quarter, of the loan applications they receive.
  • Small banks – community banks and regional banks are approving slightly less than one-half of all applications they receive, approximately 49.4 percent. It is worth noting this is a significant improvement over 2015.
  • Institutional lenders – overall, institutional lenders are making greater strides than their counterparts, approving slightly more than two-thirds, 67.4 percent, of loan applications. This is good news but in general, these are lenders who are seeking high rates of return and have minimum loan amounts generally higher than what most small businesses can qualify for.
  • Alternative lenders – interestingly enough, the one area where loan approvals to small businesses continue to fall is with alternative lending sources. Keep in mind, in most cases, these lenders focus primarily on businesses where there are credit issues. Chances are, any business owner who must work with these lenders are paying higher rates than normal.
  • Credit unions – while credit unions are currently approving slightly more than 40 percent of all small business loan applications, this number is at record lows for credit unions.

These numbers are not good for small businesses because they reflect one very important fact: Small businesses still face hurdles when it comes to securing much-needed financing for their activities, and particularly when it comes to continuing to take the lead in job creation.

Contracts, Agreements to Purchase, and Invoices

There is an irony to a business owner not being able to secure financing when they have contracts to deliver the product, agreements for future product purchases, and have issued invoices which are currently unpaid when they need capital. Most banks, credit unions, and other financial institutions do not see any value in these commitments and therefore they tend to discount them. This is not the case at Capstone Capital Group — we understand the needs of business owners to secure capital and we can help them make the most of their accounts receivables, import and export agreements and contracts by providing financing, and helping with letters of credit and logistics.

Thanks to a unique approach to financing, we have been able to help small and medium-sized businesses take advantage of new opportunities to grow their business by developing a funding plan that meets their needs. Whether you are a small or mid-sized business owner, or you are a broker who has financing clients who do not fit into the mold traditional lenders are willing to work with, contact us today and let us help. You can reach one of our professional representatives by contacting us by phone at 347-410-9894 or by Email at [email protected].

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