Our economy has taken a real beating since early March when many states closed down non-essential businesses. This has resulted in numerous small and mid-sized business owners to scale down their operations, or in some cases, to scale up their operations because other businesses were unable to keep up with the current demand. Defining Essential BusinessesEach state has determined individually what qualifies as an essential business during this pandemic. In many cases, these jobs were defined as anyone who provides food, utility services, medical care, or law enforcement services. Some were more broadly defined, leaving many business owners confused, or operating under new guidelines including having a process in place for keeping employees, customers, and vendors safe. These involved investments of different amounts depending on the industry. CARES Act Loans Not Distributed to Many Business OwnersThe CARES Act which was signed into law by President Trump offered businesses with up to 500 employees (defined as a small business) an opportunity to participate in the Payroll Protection Plan (PPP). This plan provided short-term loans for small businesses where they could recover up to six months of expenses provided they rehired their employees during the pandemic. If a company kept their employees on the payroll, the loan would be forgiven (i.e. turn into a grant). However, there have been numerous complaints about this program including:
The overall result of PPP has been disappointing for many small business owners because while there were significantly reduced requirements, many of the larger banks were able to approve loans more quickly than community banks and non-traditional lending institutions. This has left many business owners struggling with the funds needed to keep their businesses afloat during this challenging time. Options Available Outside PPPFor those business owners who were unsuccessful in applying for funding under PPP, there may seem to be very few options. However, since there are still construction projects going on, many mom and pop stores remain open, and many restaurants are operating, there is still a need to fund some of the most vulnerable businesses during this time. This leaves business owners facing the awkward decision of how to keep their bottom line in the black while we all adjust to what may be a “new” normal. Here are some of the options available to those business owners:
Why Invoice Factoring Makes SenseRather than attempt to get a new bank loan, which many acknowledge could be more challenging, using your future cash flow to fund increased demand for your products or services makes sense. Not only are you avoiding taking on new debt, but you will also be able to receive payment for those goods or services in a timelier manner, a lot faster than the normal 30 – 90-day cycle usually associated with accounts payable. If you are one of the thousands of small or medium-sized business owners who are facing a cash crunch as your company prepares to reopen following a shutdown, or if you have been open all along but you need additional capital to meet demand, contact a highly-trained representative at Capstone Trade today at (212) 755-3636 and let us help you design a customized financing package designed to meet your specific needs.
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Capstone Capital Group, LLC
Capstone seeks to fund under-capitalized, competent businesses to sustain sales growth, preserve capital and ensure business goals are realized. |