With tax season winding down, many consumers are likely receiving their refunds, which could lead to a spike in business for small- to medium-sized retailers.
Should these businesses see more sales in the near future, they could encounter the need to replenish their inventory. Unfortunately, selling more product doesn't mean a business will have the necessary cash flow or available capital to obtain a loan from a bank, but there are other options, such as inventory financing.
According to PriceGrabber's Tax Survey, 54 percent of Americans expect to receive a tax refund, with one in four saying they will get more back than last year. Of the people who will receive a refund, 56 percent said they plan to use that money to shop, which is a 13 percent bump from the previous year.
"As expected, many taxpayers are looking to save or pay off credit card debt with their refund, however our survey data also indicates a springtime boost in the economy as 56 percent plan to splurge on clothing, home goods and electronics this year," said Rojeh Avanesian, vice president of marketing and analytics of PriceGrabber.
With the average tax refund expected to be near $3,000, consumers who spend this money could create more business for retailers.
Businesses that experience increased sales and need to restock their shelves can potentially take advantage of inventory financing. This type of asset-based lending allows retailers that have been turned away by a bank to use their current inventory as collateral to obtain a revolving line of credit.
This can be beneficial for small- and medium-sized retailers that don't have funds available to replenish their inventory on their own because cash is tied up in other areas.