The Pros and Cons of Funding Your Startup through Credit Cards

20:38 06 October in Blog

Is funding your startup through credit cards a viable solution? After all, not every aspiring entrepreneur is lucky enough to qualify for a business loan. We’ll tell you the risks of funding your startup with credit cards and some alternative strategies you can explore.

Tempting Low Cost

In some cases, for $5000 to $10,000 you could launch a startup and it can be a tempting motivation for using credit cards. Several successful startups have gotten their start this way, including the Tropolis group. In the recent economic climate, many starting entrepreneurs find themselves without the collateral to start a business, and credit cards seem to be the only option. However, building a business that relies on funding from clients can be risky when using credit cards, because a late payment from a client can lead to a late credit card payment. Interest payments could accrue.

Organization is Key

Funding your startup through credit cards also requires a high level of organization if you want to keep your debt low. To ensure you do not get in over your head with debt, you’ll have to pay the credit card bills in full every month to avoid accruing interest payments. It may seem like common sense, but organization skills are key to remaining out of debt – it’s easier said than done.

Transitioning to Sustainable Funding

Even if you’re starting your business by relying on credit cards, your long-term strategy needs to change. You should plan to rely on revenue from customers. Using credit cards to fund long-term infrastructure, or even salaries for employees is a good way to end up in debt. Pay off your debt. Potential investors are not keen on seeing it.

Ultimately, the choice is up to you. Just know that there are better options out there, like purchase order financing and trade financing, both of which are available at Capstone.

For more information on lending options that are tailored to your business needs visit our homepage. Check back in on our blog from time to time for more industry news and analysis.

Bye-Bye, Branches-Branch Closures Signal Big Changes in Banking Services

15:23 26 November in Blog

As banking continues to go through changes and services become more electronic-based, bank branches are slowly falling off the map. Just under 2,600 bank branches have closed in 2014, while a mere 1,137 have opened. SNL Financial reported that 2013 saw a net loss of 1,487 branches while 2014 has seen a loss of 1,462 so far. In total, there are 94,752 branches in the US, leveling out to an overall 1.5% decline.

Acquisitions, mergers, e-banking services, regulation and many other factors have contributed to the slow decline of brick and mortar branches.

The following top five banks that have seen closures this past year:

· Bank of America (148 closures)

· SunTrust (60)

· BNP Paribas (47)

· KeyCorp (45)

· JP Morgan Chase (40)

It’s clearly noticeable that Bank of America has seen the highest number of brick and mortar branch closings. In the 3rd quarter alone, the company saw 41 closings. Bank of America is currently the second largest bank determined by deposits. It ranks third for branch numbers in the US. As of June 30, 2014, this number was 5,099.

As closures continue to sprout up across the board in virtually all areas of the US, many fear that the impact on neighborhoods and communities will be a significant one. The National Community Reinvestment Coalition stated in a report the “vibrancy of communities” relies heavily on the “critical services” that bank branches provide. The group noted that predatory lenders are just one of the many problems that arise in areas where bank branches close their doors.

Others believe that bank branch closings will only see a temporary decline. Banking analysts are confident that things will smooth over once the yield curve begins to expand, and the Federal Reserve regulates interest rate policy.

In terms of regional closings, SNL Financial reported that Chicago has seen the largest hit with 125 losses. Washington, D.C., saw the second most amount of closings, ranking in at 39.

Illinois, in terms of state closings, saw the largest loss. Ranked behind Illinois were Pennsylvania with 92 losses, Ohio (84), Michigan (75), and New York (70). In fact, only six states reported positive gains in the past year. Nebraska saw the most openings which totaled to nine.

While most banking services can be conducted online, there are still some things that community bank branches do which serve a purpose. Regardless of technology and mergers rendering a select few branches useless, the rest will continue to thrive and serve communities.

The banking industry has gone through many changes these past few years and continues to do so. Services that banks used to offer have changed significantly and have even been eliminated altogether. With regulators imposing ever stricter rules on credit, businesses are finding it more and more difficult to obtain loans they truly need. Capstone Capital Group, LLC has the answer. Capstone has eliminated the bank red tape by offering small to mid-sized business Single Invoice Factoring (“Spot Factoring”). Businesses can now get the immediate cash they need in exchange for working capital from Capstone Capital Group. For more information on Capstone’s Single Invoice Factoring call us today at (212) 755-3636.

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 factoring, Single 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.

Lawmakers Continue to Turn Up The Heat On Big Banks

20:49 16 October in Blog

In a recent hearing before the Senate Banking Committee, lawmakers continue to call for increased regulatory reform from regulators in an effort to reduce the risk big banks pose to the U.S. financial system.

A distinction was made between large banks and other financial institutions. Several senators encouraged regulators to lessen the burden, or possibly exempt, certain insurance companies and small to midsized banks from aspects of Dodd-Frank.

Sen. Bob Corker (R., Tenn.), for instance, called on regulators to take whatever steps necessary to make certain these banking institutions are not too complex so as not to be resolved through bankruptcy.

Other senators praised the Federal Government for promising to raise the capital requirements on the largest U.S. banks. According to Sen. Sherrod Brown (D., Ohio), there is a great deal of support in both the house and senate to implement stronger capital standards. Such standards could require big banks to retain additional earnings in order to build capital they would use to fund lending rather than allocating such earnings to their shareholders.

Banking executives believe that capital rules for the largest U.S. banks are already too high.

The senators’ frustration regarding Wall Street banks were further expressed in the hearing by Sen. Elizabeth Warren (D., Mass.). She inquired as to why individual bankers were not being held accountable for their nefarious actions which lead to the financial crisis. Ms. Warren’s concern is that lack of criminal prosecution may send the message that you can break the law, get away with it, and receive a bigger paycheck.

With lawmakers continuing their efforts to put pressure on regulators to come down hard on banks, the ones that ultimately suffer are those looking to banks for capital. Individuals and small business owners who rely on bank financing may find it more difficult to obtain the loan they so desperately need in order to make payroll or expand their business.

As lawmakers continue to apply pressure on regulators to impose more stringent requirements on the banking industry, it is clear small business and working capital loans will become ever more difficult to acquire. Capstone Capital Group, LLC understands the concerns of commercial borrowers who are considering bank financing. Accordingly, we offer various business finance options, including “Single Invoice Factoring” which functions as a safer alternative to traditional, and often times unpredictable, bank financing.

Our underwriting guidelines are simple, straightforward and not subject to stringent regulatory oversight and control.Capstone Capital Group, LLC specializes in Purchase Order factoring, 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. Give us a call today to find out how we can help you.

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.

Pulling Back the Reigns of Growth – Small Banks Restrain Progress Fearing Costly Regulations

14:55 08 August in Blog

Banks have come under intense scrutiny in recent years following the financial crisis that began in 2007. The regulatory pressure doesn’t seem to be letting up anytime soon as regulators attempt to reign in banks designated as “systemically important.”

According to regulators, systemically important banks are those which report assets of more than $50 billion on average for four quarters in a row. Once a bank has achieved this status, banks are required to comply with, among other things, stringent capital requirements, submit to yearly “stress tests” and to create processes for the winding down of a bank in the event of a crisis.

The purpose of placing a $50 billion asset threshold amount, according to regulators, is to keep a closer eye on banks whose potential problems could endanger the broader financial system. However, some critics within the banking industry argue the threshold is too low and that banks who come close to that amount are far from “financial giants”. This issue has caught the eye of Federal Reserve governor Daniel Tarullo, who stated in a speech that it might make more sense to increase the threshold from $50 billion to $100 billion for applying certain rules. The suggestion being that the “stress test” process seems unnecessary for banks under $100 billion.

As a consequence of these stringent and costly regulatory requirements, some small asset banks like New York Community Bank (NYCB), whose reported assets in the first quarter of 2014 was $47.6 billion, has come out with a statement that it is restraining its lending growth citing loans amount to assets. If other small banks, like NYCB, who are coming up to the $50 billion threshold limit decide to take a similar approach and restrain growth by curbing its 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. Fortunately, Capstone Capital Group, LLC has the solution.

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 Purchase Order factoring, 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.

5 Items to Look Out for When the GDP is Announced

20:28 31 July in Blog

The Bureau of Economic Analysis released an advanced estimate of the United States GDP for the second quarter earlier today. After what many would have designated as a weak first quarter, the US economy gained some momentum in the second quarter and came in stronger than anticipated. The report showed the GDP increasing at a rate of 4%, respectively to a 2.1% decline in the first quarter.

Today’s announcement has a substantial impact on nearly everyone within the US economy. However, is just knowing the numbers really enough? There are certain thoughts that should be placed into question when the GDP is announced. After all, this is an assessment that is used as an indicator of our standard of living. Below we offer five items to look for when the GDP is announced:

Top GDP Stats to Look for

The offset of the loss in GDP in the first quarter with second quarter growth. During the first quarter of 2014 GDP declined by 2.9%. During the second quarter of 2014, the GDP was forecasted to grow by 3%. However in an advanced estimate that was released today, it showed the GDP actually increased by 4% These two quarters essential have left the economy flat for the first six months of 2014.

What are consumers up to? Discretionary purchases and household spending represent about two thirds of the economy. Depending on consumer sentiment could foreshadow increases in demand which was necessary because the first quarter of 2014 demand increased by 1%. The government blamed the lack of consumer confidence on the “Polar Vortex” or bad weather.

Business inventories; how high or low are they? In the first quarter they rose by 1.7% which means goods were not being shipped. Unless this trend has been reversed it could spell trouble for business sales and consumer confidence.

Will the Government revise their numbers? Should the government increase the negative growth percentage for the first quarter of 2014 it could have negative implications for the balance of 2014. If the revise it in a positive manner it will yield positive results for growth for the balance of the year.

If GDP increases beyond the forecast of 3% then there is a chance that business confidence has increased as well. This translates into higher production rates and hopefully increased sales and employment.

After a negative first quarter, the GDP rebounded back at an annual growth rate of 4% due to an increase in household spending and business inventories. At Capstone Capital Group, LLC we feel as if this growth may blossom into other opportunities. Capstone is a factoring company here to help your new business start, grow, and thrive. We pride ourselves as a factor whose objective is to help you succeed. We offer single invoice factoring which can provide you with the capital you need to accelerate your cash flow and help your business continue to grow and thrive in today’s market.

For more information on how Capstone can help, please email [email protected] or call (212) 755-3636 to speak with a representative today.

Banks Ease Lending Standards Regardless of Regulations

21:31 17 July in Blog

In a recent report issued by the Office of the Comptroller of the Currency (OCC), certain areas of concern were highlighted which identified where banks took on more risk in pursuit of profits: high-yield loans issued to more speculative borrowers and indirect auto loans issued by banks to through car dealerships. Similarly, banks are also easing lending standards on commercial loans.

With demand for financing still at an all-time high, a finite pool of lending opportunities, low interest rates, intense competition, slow growth and increased governmental regulation, banks are feeling the pressure to increase revenue in today’s current economic climate. According to the report, the increased risk taking comes as banks continue struggling to generate strong profits in the aftermath of the 2008 financial crisis. The industry’s overall net income set a record in 2013, rising 12% from a year earlier to almost $108 billion. The previous record was in 2006, and the fact it took the industry seven years to top that reflects “the weak nature of the banking recovery so far”.

Current regulation, brought about by the Dodd-Frank legislation, which capped the amount of commissions and fees banks can charge for originating loans have seemed to create a scenario where banks are now taking on higher risk loans in order to compete and make a profit in this new era of extreme banking regulations. It is clear that if congress had truly understood the marketplace, they would not have produced the income problems which Dodd-Frank has unfortunately created.

Capstone Capital Group, LLC understands the concerns of commercial borrowers who are considering bank financing. Accordingly, we offer various business finance options, including “Single Invoice Factoring” which functions as a safer alternative to traditional, and often times unpredictable, bank financing. Spot Factoring provides flexible, no contract invoice selling in exchange for working capital from Capstone Capital Group.

Give us a call today to find out how we can help you. Our underwriting guidelines are simple, straightforward and not subject to stringent regulatory oversight and control. Capstone Capital Group, LLC specializes in Single Invoice Factoring (“Spot Factoring”) for firms in need of immediate cash. Call Capstone at (212) 755-3636 or email [email protected] today and speak with a representative.

[1]Lenders Are Warned on Risk-Regulator Urges Caution by Banks About Standards Amid Competition, By Victoria McGrane And Gillian Tan

Feds Streamline Lending Standards: A Good Idea Or Will History Repeat Itself?

18:35 19 June in Blog

In an effort to assist minority entrepreneurs to borrower funds for business ventures, the federal government recently announced it would be streamlining its lending standards in connection with Small Business Administration (“SBA”) Loans. In order to increase the percentage of loans made to African American business owners, the SBA will no longer require lenders to perform an analysis of cash flow or debt service coverage on loans of $350,000 or less. The changes will begin starting July 1, 2014 and according to the SBA, these modifications in qualifying guidelines are aimed at simplifying and streamlining the lending process in an effort to incentivize banks to do more small-dollar loans in order to get more loans into the hands of traditionally underserved entrepreneurs.

We at Capstone Capital Group, LLC find this change in criteria alarming. As a private financial institution that assists its clients in accelerating their cash flow through Factoring accounts receivable it is our goal to increase access to capital for all qualified business borrowers. However, providing access to capital to unqualified borrowers who do not have the ability repay will ultimately cause further problems down the line. Once these no cash flow loans begin to default, Congress will have to act because taxpayer money is at stake. The laws they ultimately will put in place will end up hurting small businesses access to conventional bank financing as Dodd-Frank has.

If history has taught us anything, it is that relaxing underwriting guidelines in an effort to extend loans to “underserving” individuals is not necessarily a good idea. Like sub-prime commercial lenders in the past that offered small balance, stated income/stated asset with no debt service coverage, commercial loans to business owners who would not necessarily qualify for traditional financing, the government may be going down a dangerous slope with its new underwriting guidelines on SBA loans aimed at what they term as “underserved”. The government lowering its lending standards to spur loan demand is a recipe we have seen all too often in this country, which ultimately has led to defaults and often times foreclosures.

Recent events in the student loan market support the ultimate end game using relaxed standards. Prior to the government handling student loans they were administered and underwritten by banks. Now college graduates are graduating with mountains of debt because the ability to repay is not taken into account. The tax payers will ultimately bear the burden of paying all of these poorly underwritten student loans back as more and more graduates are under employed and cannot pay their debts.

Further, and even more unsettling, is that commercial banks aren’t given similar consideration as they are prohibited from doing the same under Dodd-Frank. As much as the government may believe loosening lending standards on SBA loans to spur lending to the undeserved is a good idea, these loans may very well be like the recent student loan crisis the government has created.

Capstone Capital Group, LLC prides itself as a factor whose objective is to help its clients grow. As an alternative, we offer purchase order factoring, single invoice factoring which can provide you with the capital you need to accelerate your cash flow and get your business back on track without undertaking debt you are unable to repay.

For more information on how Capstone can help, please email [email protected] or call (212) 755-3636 to speak with a representative today.

How Much Time Do You Have?

19:00 10 April in Blog

Now that you’ve assessed your progress to date upon the close of the first quarter, its time to determine how much time you have to get going.

In an article in the Wall Street Journal from April 1, 2014 entitled, “Creating A Path To Bankability,” the author discusses the various finance tools available to small businesses looking to expand. The main point of the article is that while many alternative lenders exist for the sole purpose of preying on small businesses that do not have the financial stability to acquire more affordable financing, there are lenders that provide alternative lending solutions which put the company in a better position than where they started.

The reality behind inexpensive financing and SBA loans is that they require a significant amount of time, and as the old adage says, “time is money.” How long can you afford to wait to grow your business while you shop your loan around to various lenders who will take months to review stacks of paperwork that will be required of you? My guess is, if you’re looking for financing you’d like to get it as soon as possible. Any time spent with your application on someone’s desk is time spent NOT growing your business.

Capstone Capital Group, LLC’s approach to this problem is very straightforward. Within minutes of receiving an application, we are running searches and reaching out to you to acquire the information we need to make a fast decision. We are as eager to do business with you as you are to do business with us. Our process can be summarized with two very simple questions:

Do you have accounts receivable to sell?
Do you want to grow your business?

If you answered yes to both of these questions, there is no reason to let opportunities continue to pass you by. The best part about working with Capstone is that there are no long term commitments and we are willing to work within any bank relationship you may already have in place! Better yet, continue to work towards getting that SBA loan you have your heart set on and factor your invoices with Capstone to bridge the gap between applying for and securing your SBA loan.

Contact Capstone today to find out more about our invoice factoring and trade finance solutions. Stop waiting, you’re running out of time!

Download: Infrastructure Investment & Jobs Act – Contract Opportunities and Funding Analysis

Capstone wants your business to take full advantage of the opportunities (or use projects) available through the Infrastructure Investment & Jobs Act recently signed into law.