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.

2018 Facts for Small Businesses

15:56 03 December in Blog, Business Funding

 

There are more small businesses in the United States than most people know. Current estimates are there are 30 million businesses classified as small business.  There are more than 57 million people employed by small business owners, making small business an important part of our overall economy. It is estimated small business accounts for more than 60 percent of overall job growth in the U.S.

Geography of Small Businesses

Every region of the United States has small businesses. However, the South and Mid-Atlantic are home to nearly 50 percent of all small businesses while New England and the Farm Belt account for only 10 percent. Keep in mind, by definition, small business is defined as any company employing fewer than 500 employees.

Financing Challenges Associated with Small Businesses

Nearly one-quarter of all small businesses fail to obtain sufficient levels of financing. When you combine this statistic with the decline of banking institutions in the country, this is a sobering statistic. During 2017-2018, 271 banks closed their doors. This means small business owners often had to elect to find alternative methods of financing their businesses.

Impact of Financing on Small Business

Small businesses have always faced financing challenges, particularly during their first few years. Some of the options they have used include:

  • 32 percent depend on company earnings
  • 31 percent depend on credit cards
  • 15 percent depend on large banks
  • 14 percent depend on community banks
  • 13 percent depend on loans from friends and family

When a small business cannot obtain the funding they need, they are faced with difficult decisions. Some of the ways business owners respond to a lack of funding include turning down sales, cutting employees and slowing their operations or growth. Since so many small businesses exist, this could spell trouble for the larger economy. In most cases, one of the primary reasons given for closing the doors on a small business include lack of financing.

Small Business Diversity Statistics

Small business across the country account for nearly 50 percent of all employees. There are a staggering eight million firms that are considered minority-owned. More than 250,000 businesses are considered small business exporters as well.

Challenges Funding Import/Export Transactions

Because of the number of small businesses involved in trade, it is easy to assume they face more than their fair share of challenges when it comes to obtaining funding. This is true at most stages of an export business because there are numerous components including logistics.

Fortunately, Capstone Capital Group can help these businesses by providing a broad range of services to help with export financing. We understand how to structure the right type of transaction to help with financing, provide logistical support when needed, and help you with other aspects of these transactions. We understand how important this is for your continued business growth and that is why we offer customized trade financing solutions designed to meet your needs.

Minority-Owned Business Solutions

Despite the number of minority-owned businesses across the United States, many of these businesses suffer financially because of a lack of resources. There are hundreds of studies showing a minority business owner can still face hurdles when seeking financing options. Like every business owner, a minority must have access to public and private funding sources to help them growth and allow their business time to thrive.

This is when you can count on Capstone Capital Group. We take pride in the fact we have worked with various minority-owned businesses to help them overcome their financing challenges. Thanks to the efforts of our diversity team, we can provide a range of financing solutions to help minority-owned businesses the opportunity to find a solution that best meets their needs.

Small business owners need not borrow money on their high-interest credit cards, reduce their employee count, or turn down potentially lucrative contracts. Instead, contact an experienced member of our team at (212) 755-3636 to speak with a representative today and let us help you get the funding you need.

 

 

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.

 

Number One Threat to Long-Term Economic Growth - Explained by Capstone

This is the Number One Threat to Long-Term Economic Growth

12:10 07 August in Blog

Amid positive job reports and a surging stock market, one factor still presents a major obstacle to long-term economic growth in the US: a persistent slackening of productivity. We are currently in the midsts of the longest downward slide in worker productivity since the 1970’s, an unfortunate asterisk that should accompany the latest round of job reports. It’s also likely to keep the Fed from raising interest rates any time in the near future.

Productivity by the Numbers

Productivity — the measure of what goods and services a worker produces each hour on the job — fell 0.5% at a seasonally adjusted rate during the second quarter, according to the Labor Department. That marks the third consecutive quarterly drop in productivity, the longest streak since 1979. What’s worse, the trend shows few signs of abating; productivity growth rang in at just 1.7% from 2007 to 2015, half that of 2000 through 2007.

Why Worker Productivity Matters

For business owners, the importance of worker productivity can’t be understated. The equation is simple: less productivity means more expenses and less profit. On a macro level, productivity is a key gauge in measuring wage growth, prices, and overall economic output — which have all been falling as well.

What’s Killing Productivity?

According to numerous studies, lagging productivity has several culprits. Among the most important are businesses unwillingness to invest in new equipment, machinery, and equipment — the raw materials that translate directly into job growth, wage growth, and gains in worker efficiency and productivity. While the exact cause of lagging productivity is difficult to nail down, it’s worth noting that fixed nonresidential investment, the meat and potatoes of business spending, has also dropped the last three quarters along with productivity.

That lack of investment has lead to a decline in new orders for nondefense capital goods on a year-over-year basis for much of the last year and a half.

What’s the Solution?

As we mentioned in our most recent blog, the majority of US manufacturers are small businesses — and many find themselves sorely lacking the working capital needed to invest in their businesses, jump-start productivity, create backlogs, and grow. As a low-risk remedy, manufacturers and other small businesses with strong demand for their products use invoice factoring to boost their cash flow. That’s where Capstone can help!

Grow Your Business with Capstone

For qualified clients, Capstone provides purchase order factoring, single invoice 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.

Small Business Exporters Fearing Credit Crunch

19:25 06 November in Blog
Congress made a decision to temporarily extend the Export-Import Bank. However, the decision is affecting business owners who depend on the credit agency. The agency decreases their risks when they export items.
 
The charter was extended by Congress until the middle of 2015. The extended time frame was a compromise between people who trusted the agency and individuals who wanted to get rid of it. Typically, the export-agency is reauthorized by lawmakers every few years.
 
Jennifer Dettman of Shark’s Veterinary Equipment stated that she depended on the bank because it provides open credit for two months. Dettman’s company only has seven employees where everyone builds surgery tables for various animals. Once built, the tables are sold to zoos, universities, and clinics in different countries. The company started using the bank’s insurance program back in 2011.
 
When a client orders a table from the company, the employees manufacture it for nearly two months. The table is insured by the Export-Import Bank for a fee of 0.5 percent of the overall shipping cost. Usually, the company makes each customer pay for this fee. When a client defaults, the company can process a claim after 90 days at the bank. 95 percent of the company’s losses will be covered with the bank.
 
According to Ms. Dettman, the bank provides very good coverage. Dettman also stated that the bank reduces her risks. Dettman knows that there are similar insurance coverage plans in the marketplace, but she does not know the price plans.
 
Trading partners in the United States seek help to support their exporters. According to supporters, the agency lowers the federal government’s deficit. Earlier this month, the agency reported that 675 million dollars were sent to the Treasury Department this year. Congress passed an extension that lasted until June 30.
 
Supporters now want a reauthorization that has a longer term. Last week, a bipartisan legislation was unveiled in the House Financial Services Committee by two key members. The bank’s charter will be extended for five years if the legislation passes. The new measure will require the bank to allocate half of their net earnings every year. A portion of the monies will be used to cover potential losses.
 
As the banking industry continues to get hammered by governmental regulation, gaining access to small business and working capital loans will become more and more difficult to obtain.  Capstone Capital Group, LLC appreciates these concerns and has the solution-Single Invoice Factoring.   Single Invoice Factoring functions as a safer alternative to traditional and unpredictable bank financing.  Our requirements are straightforward and easy to understand.  We are not subject to strict regulatory oversight and control. Capstone Capital Group, LLC is here to help small to mid-sized firms who are in need of immediate cash.  Our Factoring programs provide flexible, no contract invoice selling in exchange for working capital.  Give us a call today to find out how we can help you. 

 

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