Funding Opportunities and Small Business Industry News

10:34 14 January in Blog, Business Funding

As the year approaches the end, it is time to focus on what steps we could be taking to increase business during 2019. On this front, there is plenty of good news for small businesses, particularly those who are designated as minority-owned, those businesses which have a HUBZone designation, or Service-Disabled Veteran Owned.

Increased Government Contracts May be Available

The U.S. Treasury Department recently released information about the potential of increased contracts during Fiscal Year 2019 for businesses with the previously mentioned designations. This is great news for those businesses who wish to start doing business with the federal government since this is a great way to grow your business.

Understanding the Designations

Small businesses may not be aware they could be eligible for prioritization to win government contracts. Here are the descriptions of each of the categories where your business may have priority over other businesses when it comes to bidding, and winning government contracts.

  • Minority-Owned Business — a small business where the ownership is at least 51 percent controlled by a minority population may request minority-owned designation. Minority is defined as those identifying with specific groups including Asian, Black, Hispanic and Native American.
  • HUBZone Designated — small businesses located across the United States may be surprised to learn they are in a HUBZone. Currently, the commitment is that at least three percent of all government contracts will be awarded to businesses who fall into this category.
  • Service-Disabled Veteran-Owned — these businesses are owned and operated by one or more veterans who have service-related disabilities. Another important note to be aware of is the day-to-day operations must also be managed by a veteran. Overall, there is a commitment to award three percent of contracts to small businesses meeting this criterion. This is in addition to the commitment made by the Veteran’s Administration utilizing the Veterans First Contracting Program.

Rising Wages, Low Interest, Greater Competition

More small business owners are being forced to consider increasing wages because of the tightening labor markets. However, this is not necessarily bad news since interest rates are still well under control. Thanks to some regulations being modified, there is also a lessening of restrictions on small businesses.

During October of 2018, most small business owners believe it is a good time for them to continue to increase hiring, invest more in their businesses and many have experienced greater sales. While this is all positive, most small business owners still feel access to capital is one of the challenges of operating their small business.

Financing Your Growth

Fortunately, small businesses, particularly those who wish to do business with the government have options. Businesses often need additional resources to place successful bids, which in many cases, may be out of reach for a small business owner either financially, or simply due to a lack of contacts.

Capstone Capital Group can help! We have experience helping small minority-owned businesses get the credit they need to grow their business. We also offer a range of services designed to help you get the resources you need to successfully bid on government contracts.

We have helped with non-legal contract reviews, providing bid support letters, and helping minority-owned businesses get the accounting, estimating, and engineering referrals they need to support their bid.

For more information on Capstone’s diverse funding programs, please contact us at (212) 755-3636 to speak with a representative today. Our highly trained, professional representatives will work with you to obtain a minority business loan and start growing your business today. Let us put our years of experience to work and help you grow your business in 2019.

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.

 

Understanding Non Recourse Factoring

12:21 16 April in Blog, Business Funding

Like any type of financing, accounts receivable factoring is a risk taken by the factoring company. In most cases, accounts receivable factoring is based on the creditworthiness of the underlying customer. Therefore, a factoring company does not provide financing for invoices that are made to an individual customer, instead they provide funding against invoices made to other companies, or to government entities. This is why we need to understand non recourse factoring.

Collection Activities and B2B Transactions

Typically, when businesses are completing transactions, they offer terms that may give a company up to 90 days to make payment.

In some instances, they offer discounts if an invoice is paid sooner. In the case where a company has opted to factor their accounts receivable, they turn the risk, and collection activities over to the factoring company. However, what happens when the customer does not pay their invoice?

If a company is managing their own accounts receivable, they may put forward demand notices, and hold the company responsible for paying the invoice with certain late charges which are normally laid out in their contract. Many contracts also have a recourse clause which may hold the company owners accountable personally for unpaid bills.

If payments are not made as agreed, you would typically stop doing business with the company until the invoice was paid in full. Chances are, you would likely require a deposit or full payment before doing additional business with the company. This is known as full recourse.

Meaning of Non Recourse Factoring

But, what happens if you are working with a factor and they have offered to factor your receivables with no recourse?

First, it is important to understand what no recourse means. In most factoring contracts, no recourse usually means that the factoring company will not seek payment from you under certain conditions.

The typical condition is the insolvency of the customer that occurs during the time of the factoring period.

For example, if you have issued an invoice that is due in 90 days, and a factoring company has advanced you cash against that invoice, the company would have to go out of business during the 90 day period between issuing the invoice and having the payment due.

What Non Recourse Factoring Does Not Cover

Even if your factoring company has agreed to factor your receivables without recourse, there are certain exclusions which you should be aware of. For example, in most cases, factoring advances will not be considered without recourse if:

  • There is a dispute over an invoice – if you have issued an invoice and your customer disputes the invoice, chances are, the factoring company will not allow you to walk away from the debt you incurred because of factoring.
  • You deliver products to non-paying customers – if you have a customer who has been consistently late paying invoices and you are still delivering product to them, you are increasing their outstanding amount owed, meaning the factoring company is at even more risk of losing money. Most of the time, you will be held responsible for these invoices.
  • You owe the company money – if you have a reciprocal arrangement with a company you do business with, and the company credits amounts you owe them against amounts they owe you, the factoring company may not grant you the ability to factor those invoices without recourse.

When entering into a factoring contract, it is important to understand the terms you are agreeing to abide by.

We make sure our contracts are easy to understand and you understand whether you are accepting funding against your receivables with or without recourse.

Capstone is a private finance company offering various solutions to businesses to provide them with more consistent cash flow.

Contact us today to request funding or to speak with one of our representatives to learn more about how Capstone can help your business grow and flourish.

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.

Think US Manufacturing is Dead? Think Again - Capstone Financing

Think US Manufacturing is Dead? Think Again

22:08 30 March in Blog

Think US Manufacturing is Dead? Think Again - Capstone FinancingThe US manufacturing sector weakened throughout 2015 as the dollar strengthened and made US exports more expensive overseas. Manufacturing activity increased in February, but it remained below the 12-month average. New orders remained positive in January and February, buoyed by increased consumer spending. Though consumer confidence weakened somewhat in March—hurting the manufacturing sector even more—month-by-month evaluations can be misleading. There’s a common conception that US manufacturing is dying, but that conclusion is not supported by a deeper analysis of the facts.

A Large and Dynamic Sector

While it’s true that the manufacturing sector has lost 5 million jobs since 2000, it’s important to remember that technological advancements have made it easier to manufacture more with fewer workers. US manufacturing remains a powerhouse. Though we’re second to China in terms of total output, gross output of US manufacturing industries was $6.2 trillion in 2015—nearly two times the output of other big sectors like real estate and professional and business services. 77% of research and development spending goes toward US manufacturing, meaning that innovation in the private sector relies on US manufacturing more than any other sector.

Output is Near a Record High

Today’s factories produce twice as much as they did in 1984, but they’re doing it with one-third fewer workers. US manufacturing was clobbered by the Great Recession, but it is within 3% of its peak in 2007. Durable good output reached an all-time high in 2015, tripling the levels of 1980. Electronics, machinery, aerospace goods, and motor vehicles are at near or surpassing all-time highs.

Some Industries Hit Harder than Others

Textile mills and apparel factories have all but disappeared in the United States since the 1980’s, and that has dragged down averages for the entire sector. Textile mill output has fallen 50% since 2000. But as old industries fade or move to cheaper shores, newer industries have stepped up to take their place. Nondurable goods like chemicals and paper have fallen, but food production and petroleum have taken up the slack.

The Big Picture

If we continue to compare US manufacturing activity to its heyday during and after WWII, we will continue to be disappointed. It’s unlikely that factory workers will ever make up one-third of all workers in the US ever again—but that doesn’t mean that manufacturing will lose its important place in the US economy. Business owners simply have to adjust to new realities and new demands in order to thrive.

Accelerate Working Capital with Capstone

Capstone specializes in Purchase order factoring, Single Invoice Factoring, which enables small businesses to either transfer the credit risk of their accounts receivable to a third party and/or leverage their accounts receivable to accelerate working capital through the sale of their accounts receivable to a third party.

For qualified subcontractors, we also provide single invoice and full-contract factoring for work performed under contract with a creditworthy general contractor. We have highly experienced construction professionals on staff to facilitate the purchase of construction-related accounts receivable. To learn more, please visit our homepage.

Revised GDP Figures - Capstone Financing

Late 2015 Slump Turns into January Boost for American GDP

18:58 29 February in Blog

Revised GDP Figures - Capstone FinancingBetween plummeting oil prices and a global growth slowdown, the United States economy ended 2015 with a dip — but January’s spending figures and new data on the previous quarter suggest that American consumers are brushing off the jitters. This is heartening news for small businesses and large financial entities alike, with indications that the manufacturing sector and overall economic landscape could be on the mend.

Revised GDP Figures

Friday, February 26 brought a double dose of good news for the financial market. The Commerce Department provided revised figures for the last three months of 2015, suggesting that fourth-quarter gross domestic product (GDP) growth was stronger than original reports. The revision came about through revelations that business stockpiling — holding back key inventory items in order to mitigate potential economic downturn — was lower than expected. While this is a positive outcome for the end of 2015, analysts from the Wall Street Journal expect that the accumulation could hamper first-quarter 2016 growth as businesses work their way through currently-substantial stockpiles.

GDP is widely considered to be the broadest metric of economic strength. The initial figures for Q4 2015 put its growth at .7% — a fraction of Q3’s 2% jump — but the Commerce Department has since revised that figure to a solid 1%. The same report confirmed that investments in trade and business were a critical drag factor on the economy, affected by overall global weakness.

A Promising Start to the New Year

The biggest news for businesses, however, is the roaring activity in overall consumer spending. A boosted job market and strong gains in wage levels appear to have stimulated American’s willingness to spend, with figures at their highest level in eight months. Consumer spending accounts for a whopping two-thirds of economic activity, and experts across the financial landscape are predicting that this gain will provide a significant boost to cross-sector economic growth.

January brought good news for other key indicators as well, with home purchases, retail sale levels, and big-ticket good orders all making a significant jump.

Looking to the Future: Inflation and Interest

The Federal Reserve will be closely monitoring inflation rises through 2016 in order to determine interest rate increases for the year. Inflation is a key price measure that the Fed uses to decide central banking interest rates.

The Fed typically sets its inflation target at 2% per year, but has not met that goal since 2012. However, the February 26 release stated that it is currently at 1.3% — higher than they expected it to be at the end of 2016 — indicating that the economy is now resilient enough that the central bank can step back from supporting spending and investment initiatives.

Single Invoice Factoring for Qualified Subcontractors

For qualified subcontractors, Capstone provides single invoice factoring for work performed under contract with a creditworthy general contractor. Capstone has highly experienced construction professionals on staff to facilitate the purchase of construction-related accounts receivable. For more information on small business funding, Purchase Order Funding, read our blog, visit our homepage, or contact us today.

Capstone Predicts Recession Risk Growing

Economists and CEOs Agree: Recession Risk Growing

20:19 15 February in Blog

Capstone Predicts Recession Risk GrowingAn increasing number of economists and corporate leaders say the risk of the U.S. dipping into a recession is rising. More than anything, they have pointed to the global growth slowdown and convulsions in financial markets.

According to the Wall Street Journal’s monthly survey of economists, the average estimate of odds of a recession starting in the next twelve months jumped to 21%—double the count from a year ago and the highest since 2012. Economists at Bank of America Merrill Lynch place the chances even higher at 25%.

Despite positive marks in many economic indicators, deteriorating U.S. confidence reflects concerns about slumping foreign economies.

Fed Chairwoman Testimony

In recent testimony before the Senate Banking Committee, Fed Chairwoman Janet Yellen said that the central bank is monitoring global financial markets, but reiterated her opinion that an economic contraction is not imminent. She emphasized that the Fed is keeping a flexible outlook on interest rate changes, but recent developments have not downwardly shifted the risk balance.

Business Concerns

The overall sag in financial markets, however, is feeding into concerns from business leaders. Despite a quarterly profit surge, PepsiCo CEO Indra Nooyi cautioned of a “delicate” recovery. Cisco Systems CEO Chuck Robbins said some corporate customers have started halting non-essential purchases.

Market and corporate sentiment have slid recently, and some, but not all, economic indicators have followed suit. Decreases in both oil drilling and output from utilities have prompted the decline of industrial production, and employment in the oil sector has slipped sharply. A similar decline in energy production, coupled with a strong American dollar, has put pressure on manufacturers. Factory activity decreased in January for the fourth straight month, according to the Institute for Supply Management.

Positive Signs

On the contrary, household spending continues its rise, up 3.2%. While incomes have grown slowly, the dive in gas prices means incomes are outpacing inflation. Labor market barometers show healthy readings, including the 4.9% unemployment rate, down from 5.7% a year ago, and the underemployment rate which has fallen to 9.9% from 11.3%.

Economic activity has remained stable despite market turbulence, according to Ram Bhagavatula, an economist at Combinatorics Capital, a hedge fund. The evident disparity presents a conundrum for the Fed, which projects continued modest economic growth and gradual increases in interest rates and inflation. The Fed will have more to say about its growth outlook after its next policy meeting in mid-March, but it is paying attention to foreign economic developments that pose risks to U.S. growth.

By historical standards, the current economic expansion has lasted a long time. Since World War II, the average economic expansions have lasted for just under six years. The current expansion, beginning in June 2009, is now over 6.5 years old.

Capitalize on Growth with Capstone

Whether we’re simply seeing a market correction or a full-fledged recession, Capstone is here to help. We help businesses and subcontractors take advantage of opportunities for growth with diverse business funding and financing options. For qualified subcontractors, Capstone provides single invoice factoring for work performed under contract with a creditworthy general contractor. Capstone has highly experienced construction professionals on staff to facilitate the purchase of construction-related accounts receivable. For more information, read our blog, visit our Capstone Capital Group homepage, or contact us today.

Booming Rent to Continue explained by Capstone

Builders Betting on Booming Rent to Continue—Should They?

22:47 22 January in Blog

Real estate investors are betting, perhaps mistakenly, that the six-year trend of rising rents in luxury urban apartment units will continue. Likewise, developers are hoping it will be worth their time, and money, to continue building them. According to research conducted by Axiometrics Inc., developers have built nearly 900,000 new urban apartment rental units over the past three years. This number is expected to climb by roughly 100,000, over the next three years, approaching one million new apartment units.

The Numbers

There were 328,000 multifamily apartment units built in 2014, the most in any given year in the past 30 years, according to Jed Kolko at the Terner Center for Housing Innovation at Berkeley. Since early 2010, rents have increased by over 20%. In 2015, real estate research firm Reis Inc. reports that, nationally, average rents rose by 4.6%. Demand for apartments remains high, and economists generally expect this trend to continue through 2016. But all this construction may correlate poorly with actual demand. Contractors are overwhelmingly focused on the higher end of the market, and many new multifamily properties being built are only affordable to renters making twice to four times the median income in their area.

Developers Flocking to High-End Construction

Many contractors that have previously worked in other market sectors have now moved into luxury multifamily urban apartments. Whether their background was in single-family homes, office buildings, or retail space, many have been drawn by the promise of huge profits from luxury, high-rent buildings.

Doubts in the Industry

Though optimism in housing is high at the moment, some contractors aren’t confident that the bull market for luxury apartment will continue much longer. “People are working against the clock right now,” said Jaime Lee, CEO of Jamison Realty Inc. “We’re coming to market as quickly as we can.” Lee thinks the market could start to slow in the next few years, which is an expectation shared by many economists. Statistics show that vacancies in the suburbs are declining, even as vacancies in certain urban areas have begun to rise. This trend may indicate that people are starting to feel the effects of high rents and are now looking outside of cities for housing.

The demand for new apartments is very real, but new construction, by focusing on the higher end of the rent spectrum, might have drifted too far from the typical renter’s budget.

Working with Capstone

For qualified subcontractors, Capstone provides single invoice factoring for work performed under contract with a creditworthy general contractor. We have highly experienced construction professionals on staff to facilitate the purchase of construction-related accounts receivable factoring. For more information, visit our homepage, or contact us today.

Market Woes Affecting Online Lenders - Capstone

Market Woes Affecting Online Lenders

11:54 08 January in Blog

Market Woes Affecting Online Lenders - CapstoneThere’s a great deal of uncertainty in the market right now. The Fed has already increased their target short-term rate from 0.25% to 0.5%, and they’re planning on increasing it incrementally throughout 2016. In recent years, online platforms like LendingClub Corp. and Prosper Marketplace, Inc. have challenged banks’ hegemony in the lending industry. Today, we’ll discuss how the rate hike and other developments have had a negative effect on online lending platforms and ask whether or not they’re here to stay.

Online Lenders Arrive on the Field

Online lenders find borrowers and sell their loans to investors. Using comparably low operating costs and working with investors with low yield expectations, they’ve had considerable success. According to a Wall Street Journal analysis of securities filings, marketplace loan funds raised $8 billion in 2015, over six times the amount raised the year before. Recent market woes are pinching the numbers, however, and putting online lenders’ niche at risk.

Online Lenders Forced to Raise Rates

Funding for consumer loans has started to show signs of damage. Among the recent ills are delayed deals, increased funding costs, and declining prices for securities backed by the loans. Many online lenders will require borrowers to pay higher borrowing costs. LendingClub Corp., for example, raised their interest rates by 0.25%, matching the increase by the Federal Reserve in their short-term rate. Citigroup Inc., which has sold over $1 billion in loans from Prosper, is now offering higher and higher yields to entice investors to buy. The end result will either be rising costs for borrowers or diminishing margins for investors and the lending platforms they work with.

Growth of Online Marketplace Lending in Doubt

The volume of loans made by online platforms like Prosper and LendingClub have surged in recent years, and investment vehicles that buy marketplace loans have grown as well. Now, experts are wondering if the growth will continue. In October, Stockholm-listed P2P lender TrustBuddy collapsed after serious misuse of client money. Poor stock performance by several major U.S. platforms is another cause for concern in the industry—as is the pullback of credit that has forced some high yield mutual funds to halt or close redemptions. In the end, it remains to be seen whether the recent poor performance by online lenders is an aberration, or something here to stay.

Financing with Capstone

Capstone uses unique underwriting strategies to provide accounts receivable invoice factoring, PO financing, and trade finance to small businesses, subcontractors, licensees, and distributors. For more information, please visit our homepage.

Winners and Losers from Fed Rate Increase - Capstone Financing

Winners and Losers from Fed Rate Increase

18:32 22 December in Blog

Winners and Losers from Fed Rate Increase - Capstone FinancingThe last seven years have been painful for consumers, homeowners, small business owners—indeed for all Americans. The financial crisis of 2007-2008 was the worst economic downturn in the United States since the Great Depression in the 1930s. It was caused by a number of factors, including a burst housing bubble, the selling of high-risk financial products, regulatory failures, and the drying up of bank and insurance liquidity. The result was thousands of closed businesses, evictions, and foreclosures, as well as a decline in consumer wealth in the trillions of dollars. Globally, the Great Recession was the worst financial disaster since World War II. Throughout it all, Capstone worked with small businesses to provide financing when they needed it most. Today, we’ll tell you what you need to know about the Fed increase.

Fed Interest Rates

In response to the recession, the government enacted legislation like the Dodd-Frank Act and lowered interest rates. As of December 16th, the Federal Reserve made it official that it is raising key interest rates for the first time since 2006. With the Fed creating a new Federal Funds rate target of 0.50%, all kinds of lending will be affected, from business loans to auto loans, mortgages, and credit card rates. Many are wondering how the long-anticipated rate increase will affect small businesses. Who are the winners and losers? The lending experts here at Capstone would like to give their two cents.

The Winners

When it comes down to it, the winners are the big banks. They will charge more interest for their loans, but not pass on the increase to any of the savers. Savers are unlikely to receive any significant difference in the interest paid to their accounts. The investment firm Charles Schwab Corp., for example, made $1.8 billion in net interest revenue over the last year. Net interest revenue refers to the difference between interest earned on lent assets and interested paid on deposits. With short-term interest rates higher, companies like Charles Schwab are likely to see a huge increase in net interest revenue. When interest rates were low, big money-market fund players like Fidelity, Goldman Sachs, and Morgan Chase & Co. were forced to eliminate many investor fees—resulting in hundreds of millions of dollars in losses. If the rate continues to rise over the next year above .50%, many in the money-market fund industry would be able to remove the damaging fees.

The Losers

The stock market has been falling in recent days. Liquidity in the market was already on the decline prior to the interest rate adjustment, and now it’s likely to decline even more. The losers are those who invest in equities and long-term bonds. Some also predict that the increase will negatively affect homeowners with mortgages, but this is probably overstated. Mortgages are long-term loans, and they are more heavily affected by economic growth and inflation expectations than short-term rates.

Working with Capstone

Capstone works with small businesses, subcontractors, licensees, and distributors with accounts receivable factoring, PO financing, and trade finance solutions. We have a diverse array of underwriting strategies that allow us to lend based on the creditworthiness of our clients’ customers, not our clients. For more information, please visit our homepage.

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