Purchase order financing demand could rise with numerous factors fueling economic growth

After many years of sluggish growth, the U.S. economy is experiencing numerous factors that could lead to faster expansion. 

When the economy sees an accelerated rate of growth, small- and medium-sized manufacturers and wholesalers may begin to receive orders larger than they usually handle. As a result, some sort of financial assistance might be needed, and with banks likely saying "No," purchase order financing could prove beneficial. 

Home value appreciation strong in 2013
One indicator that is important for the recovering economy is rising home values, as the housing market took a big hit during the recession. According to the latest Zillow Home Price Expectations Survey, more than 100 forecasters expect values to end 2013 up an average of 6.7 percent year-over-year, up from the previous estimate of a 5.4 percent annual gain. 

"Short-term expectations for home value appreciation through the end of this year are consistent with a nationwide housing market recovery that is both strengthening and widening, but still coping with high levels of negative equity, high demand and low inventory," said Zillow senior economist Dr. Svenja Gudell. "Combined, these factors will continue putting upward pressure on home values for the next few months."

Looking forward, home value appreciation is expected to slow a bit, but will still remain at a healthy level. Next year, panelists said they expect values to rise 4.4 percent. Gains of 3.6, 3.5 and 3.4 percent are projected for 2015, 2016 and 2017, respectively. 

Jobless claims hit a six-year low in early August
Another factor that is contributing to accelerated economic growth is the improving employment situation. The four week period ending August 3 decreased to 335,000 claims on average – the lowest level since November 2007, according to the U.S. Department of Labor

Following a pick up in firings in July during the annual auto plant shutdowns, the rate that Americans are being let go has slowed – a sign that businesses are holding on to employees to be able to meet sales. When hiring picks up, household spending could follow suit, potentially leading to faster economic growth, as this is the biggest part of the economy. 

"We'll continue to see improvement," Ryan Sweet, senior economist at Moody's Analytics Inc, told Bloomberg. "It's more important to put the emphasis on the trend in claims, which remains favorable."

Purchase order financing demand could rise with economy improving
With the housing and jobs markets continuing to fuel economic growth, there is a good chance business could pick up at the nation's small- to medium-sized manufacturers and wholesalers.

These companies make money by filling orders for retailers and other businesses, but when one comes in that is larger than usual, they may find themselves in a financial bind. Smaller companies don't often have a lot of available capital, which is why financing is essential to growth. 

Should an order be received from a big-box retailer such as Target or Walmart, small manufacturers and wholesalers may first turn to a bank. But due to the fact that capital is limited, these businesses are often turned down. 

Fortunately, purchase order financing is available to qualifying companies. This type of lending agreement allows manufacturers and wholesalers to take on large orders by allowing them to obtain up to 100 percent of the funds needed to complete them. 

Perhaps the most significant benefit of purchase order financing, other than giving businesses the ability to fill large orders, is the fact that owners of small- to medium-sized manufacturers and wholesalers are able to retain 100 percent equity in their company.