Growing small business borrowing can lead to increased demand for purchase order financing

The economy has seen many signs of improvement in the past couple months, with the most recent being a pick up in U.S. small business borrowing in May. 

As economic growth accelerates, small- to medium-sized wholesalers could begin to see orders larger than usual. With that said, these businesses might need to rely on purchase order financing to take advantage of these potentially game changing orders. 

The May Thomson Reuters/PayNet Small Business Lending Index increased to 115.1 from 108.1 in April. When compared to a year earlier, the index was up 9 percent, which helped it inch closer to the five-year high seen last December of 116.

"Small businesses are avoiding stall, and it means that there's a slow expansion that's in place," PayNet president Bill Phelan told Reuters. 

Another positive sign for the economy is the fact that U.S. small businesses showed increased confidence in May. The National Federation of Independent Business Index of Small Business Optimism edged up for the second consecutive month by 2.3 points to 94.4. 

The only component of the index that declined was plans to increase employment. In contrast, the percentage of small business owners who expect the economy to improve showed the biggest gain. 

With the potential for economic growth in the near future, small- to medium-sized wholesalers could start to see additional business. Should this come in the form of larger orders, these companies might need to rely on some sort of financial assistance due to limited available capital. 

One available option is purchase order financing, which allows businesses to obtain up to 100 percent of the funds needed to fill an order. This type of financing agreement allows a company to avoid having to sell equity.