Growing retailers could benefit from inventory financing

With the economy showing signs of improvement, small- to medium-sized retailers across the country could begin to grow. 

Should this occur, inventory financing demand may rise, as financial assistance is essential for growing companies. 

One sign that retailers are benefiting from the improving economy is continued job growth. According to the National Retail Federation, job gains in the industry totaled 37,000 in July, with increases happening in general merchandise, food and beverage and building and garden supply stores. 

"In spite of continued rancor and uncertainty from policymakers in Washington, the private sector economy continues to add jobs," NRF President and CEO Matthew Shay said. "While unemployment remains stubbornly high, with millions of Americans jobless or underemployed, retailers are adding to their ranks and payrolls."

Another factor that could lead to growth at small- and medium-sized retailers is heightened levels of consumer spending. The Bureau of Economic Analysis recently revealed Americans increased expenditures by 0.5 percent in June, potentially leading to more sales at retailers. 

When small- to medium-sized retailers experience growth, sales levels are typically higher. As a result, there is often a need to replenish inventory, and this can be difficult to do on their own dime even with increased sales. 

Oftentimes, small businesses need to put funds toward other areas such as operating costs and employee wages, but inventory financing can make it possible to keep the stock room full. 

This form of asset-based lending enables small retailers to use current product as collateral to obtain a revolving line of credit, which, in turn, can be utilized to purchase additional inventory. Essentially, businesses are able to keep shelves full when funds are tied up in other areas.