With consumers feeling less confident in the economy, small retailers could begin to see less business in the coming months, which might hurt their cash flow.
Should cash flow decline, these businesses might not be able to obtain financing from a bank in order to take advantage of growth opportunities. However, there are others options, as small retailers could qualify for inventory financing as long as they have product in stock.
When a bank tells them "No," this type of asset-based lending can provide them with a revolving line of credit to help keep their shelves stocked.
According to the Conference Board, businesses could experience a situation of struggling cash flow in the near future, as consumer confidence took a hit in March. After improving in February, the Consumer Confidence Index declined to 59.7.
"Consumer confidence fell sharply in March, following February's uptick," said Lynn Franco, director of economic indicators at The Conference Board. "This month's retreat was driven sharply by a decline in expectations, although consumers were also more pessimistic in their assessment of current conditions."
Much of the decline in March can be attributed to the sequester, which has been a cause for concern among U.S. consumers, as this has led them to be cautious about the future of the economy.
Consumer sentiment toward current conditions also fell, as the share of respondents saying business conditions are "good" dropped from 17.6 percent to 16 percent. Meanwhile, consumers who said conditions are "bad" increased slightly to 29.3 percent.
Expectations aren't that these conditions will improve in the near future either, as more people believe conditions will worsen in the next couple months and fewer consumers said they will improve.
Times such as these can be a struggle for small retailers, but inventory financing can help them get through without too much trouble.