After falling in March, confidence among small-business owners increased in April, which could be a good sign for companies across numerous industries.
The National Federation of Independent Business' Index of Small Business Optimism jumped 2.6 points in April to 92.1, slightly higher than the recovery average of 90.7. Only two index components declined – plans to make capital outlays and expected credit conditions.
"Small-business confidence saw an uptick this last month, but it was a ho hum, yawn, at-least-it-didn't-go-down reading," said NFIB chief economist Bill Dunkelberg. "The sub-par recovery persists for the small business sector."
Despite the pessimism, April's jump in confidence is a step in the right direction, especially after March's decline. Small business hiring plans have been on the rise, and the economy has been showing signs of recovery, two reasons why small-business owners should feel good about the future.
Rising confidence could be a good sign for numerous industries, including retail and manufacturing.
If the economy begins to grow at a faster rate, retailers could see more sales, which, in turn, might lead to the need for replenished inventory. While small- to medium-sized businesses can struggle to get new product on their own, inventory financing is available.
This form of asset-based lending allows retailers to use current inventory as collateral to obtain a revolving line of credit, which can be used to keep shelves stocked.
Small- to-medium sized manufacturers could begin to see larger orders if the economy sees accelerated growth, which might lead to a need for purchase order financing.
Manufacturers of this size often have limited available capital, which can maker larger orders difficult to handle. However, purchase order financing allows these companies to obtain 100 percent of the funds needed to fill an order.