When the Affordable Care Act goes into full effect in early 2014, employers that don't provide health insurance coverage could be hit with financial penalties, which could deal a major blow to the real estate industry.
With many retailers already seeing slower business as a result of the shaky economy, financial penalties could be damaging. Less available capital could reduce their chances of obtaining a loan from a bank, which can make operating difficult. However, inventory financing could still be an option for qualifying businesses seeking lending alternatives.
Recently, the National Retail Federation has been fighting to get the health care employer mandate repealed, as it says it unfairly affects the retail industry.
"Eliminating the employer mandate would greatly aid the retail community, which is heavily dependent on labor," said David French, NRF senior vice president. "One of every four jobs in the American economy is supported by retail, which would be jeopardized by the mandate effective in 2014."
French added that NRF is currently helping retailers to comply with the ACA so they can avoid any unnecessary penalties, but they still have objections to the law.
Anytime a small- to medium-sized retail business incurs an unexpected financial cost, such as health care penalties, it could be negatively impacted. This could reduce available capital, which can make it difficult for a business to receive financing from a bank.
Although retailers might believe they are out of options when turned away from a bank, that is not always the case, as inventory financing could be utilized. This type of asset-based lending agreement allows small- to medium-sized retailers to obtain financing using current inventory as collateral when business conditions force a bank to tell them "No."