With the economy showing signs of improvement, consumers have been feeling more and more confident, which could lead to higher sales at U.S. retailers.
Should sales pickup, small- to medium-sized businesses might run into the need to replenish inventory. Generally, retailers of this size can struggle to re-stock shelves on their own, as banks often turn them away due to limited available capital and inadequate cash flow. However, retail inventory financing is available to help out these businesses.
The Thomson Reuters/University of Michigan preliminary index of consumer sentiment jumped from 76.4 in April to 83.7 in May – the highest level since July 2007. This was much higher than the median forecast from economists surveyed by Bloomberg that called for a rise to 77.9.
At the beginning of the year, many experts feared income tax hikes and sequestration would have a major impact on consumer sentiment, but it appears as though that isn't the case.
"We've got a consumer that's been stunningly resilient to tax hikes and sequestration," Mike Englund, chief economist at Action Economics, told Bloomberg. "It's not an optimistic consumer, but it's a resilient one."
As consumers begin to feel better about the future of the economy, sales at U.S. retailers could begin to pickup. While this will certainly help small- to medium-sized businesses, even with higher sales they can struggle to keep their shelves full.
Some retailers are able to turn to a bank for a loan, but limited available capital and low cash flow could lead to a business being rejected. Luckily, there are other options, such as inventory financing.
Businesses turned away by a bank can turn to this form of asset-based lending, as it gives them access to a revolving line of credit using current inventory as collateral.