Small business owners saw their confidence take a hit to begin 2013. With the future outlook a bit shaky, cash flow might decline, which could limit the ability of these businesses to obtain a loan from a bank.
The National Federation of Independent Business Small Business Optimism Index increased 0.9 points in January to 88.9 but failed to recoup the losses seen last month due to issues surrounding the "fiscal cliff."
Additionally, expectations for improved business conditions rose by five points, but remained low at negative-30 percent, which is the fourth lowest reading in the survey's history. Many small businesses expect their real sales volumes to decline as well.
"The Optimism Index barely budged in January," said NFIB chief economist Bill Bunkelberg. "The only good news is that it 'budged' up, not down. If small businesses were publicly traded companies, the stock market would be in shambles."
With many small businesses still struggling, they may not have the necessary capital or cash flow to obtain a loan from a bank. However, those looking for financing, but have been given the cold shoulder by a bank, still have options available to them.
Wholesale and retail businesses that have product in stock can take advantage of a form of asset-based lending called inventory financing. This type of lending agreement allows businesses to obtain a revolving line of credit using inventory they currently have on hand.
Oftentimes, small businesses have a significant amount of money tied up in inventory, but this type of lending allows them to monetize their inventory, which can help them through these difficult times.
Small- to medium-sized wholesales and retailers can inquire with Crossroads Financial as to whether or not they qualify for inventory financing.