The past couple months have been a mixed bag for small businesses, and should they begin to experience growth, purchase order financing demand could increase.
One positive sign for small businesses is that they continued to lead the way in U.S. nonfarm private employment gains in June. According to the ADP National Employment Report, companies of this size added 84,000 new positions in June, which was more than medium and large businesses.
"During the month of June, the U.S. private sector added 188,000 jobs, driven by gains across all sizes of businesses, and with small companies showing the largest overall monthly increase," said Carlos A. Rodriguez, president and chief executive officer of ADP.
However, it wasn't all positive for small businesses in June, as the National Federation of Independent Businesses Small Business Optimism Index declined 0.9 points to 93.5.
"After two months of incremental but solid gains, the Index gave up in June. This appears par for the course, given that there is no reason for small employers to be more optimistic and lots of things to worry about," said NFIB chief economist Bill Dunkelberg.
Though optimism was down, increasing job gains could help boost growth at these businesses, potentially leading to more demand for purchase order financing. Should a small-to medium-sized manufacturer or wholesaler begin to see orders larger than they are used to handling, they will likely need some sort of financing to fill them.
Purchase order financing allows businesses to receive up to 100 percent of the funds needed to fill an order, which enables manufacturers and wholesalers of all sizes to take advantage of opportunities for growth. Small business owners are also able to keep 100 percent equity through this form of financing.