With consumers spending a significant amount of money in February, retail businesses might need to replenish their inventory if they are selling more product than usual.
Small- to medium-sized companies that don't have the cash flow or available capital to obtain a loan from a bank could take advantage of inventory financing.
According to the U.S. Commerce Department, February consumer spending increased by the largest margin seen in five months, as incomes rebounded.
Purchases jumped 0.7 percent, which account for nearly 70 percent of the economy, according to the report. This could have been the result of job-market gains, record stock prices, rising home values and wage gains, all of which have helped boost household finances. This rise was unexpected, as it came in higher than what was previously projected.
"The economy is in a very good place right now ahead of the fiscal restraint," Chris Rupkey, chief financial economist at Bank of Tokyo-Mitsubishi, told Bloomberg. "There are no signs in the data that the expiration of the payroll-tax cut is affecting consumers whatsoever. This recovery is sustainable."
However, Cooper Howes, analyst at Barclays Bank, told the Los Angeles Times that such a fast pace could be tough to continue, as consumption growth could slow in the second quarter.
As consumers begin to spend more, retailers might find themselves with a need to replenish their inventory to keep their shelves stocked. Inventory financing, which allows businesses to obtain a revolving line of credit using product as collateral, can help them keep items in stock.
This type of asset-based lending can be great for small- to mid-sized businesses, as it allows them to take advantage of growth opportunities that wouldn't have been available without financing.