Inventory Floor Planning Solutions

Posts Tagged ‘SBA’

The U.S. Small Business Administration is committed to providing small businesses with the tools and resources they need to survive in the current economic climate. Starting on July 1, 2009, through the Dealer Floor Plan, SBA will offer government-guaranteed loans to finance inventory for eligible auto, recreational vehicle, boat, manufactured home and other dealerships.

The DFP is a pilot program that allows dealers to borrow against retail inventory and acts as a revolving line of credit for a dealer to obtain financing for retail goods. The dealer repays the debt as the inventory is sold and can borrow against the line of credit to add new inventory.

How it will work:

Under the DFP pilot program, SBA will provide loan guarantees for lines of credit through its 7(a) program. DFP loans will be made through SBA lenders only for inventory that can be titled, such as autos, RVs, manufactured homes, boats and trailers. The pilot program will run through Sept. 30, 2010, at which time SBA will determine whether to extend the program.

DFP loans will be available for a minimum of $500,000 up to the $2 million allowable under the 7(a) program. With a maximum repayment term of five years, the loans will come with a 75 percent government guarantee. Borrowers will also benefit from the temporary elimination of fees on 7(a) loans made possible by the American Recovery and Rein­vestment Act of 2009.

Who it will help:

The DFP program allows SBA lending partners to prudently extend a critical line of credit in these tough economic times to viable dealerships in a number of industries, including RV, auto, boat and manufactured homes. It will help re­store their cash flow and in turn, save their business and countless jobs. For auto dealerships, in particular, it will provide the access to capital many of them need at this critical time as they go through the transition brought on by larger changes within their industry.

Because of the severe decrease of dealer floor plan financing over the last several months, each of these loans most likely will keep open a viable business that would have otherwise closed.

All loans will be made through SBA lenders to creditworthy dealerships meeting lender requirements, demonstrating sound finances and following viable business plans.

For more information, go to www.sba.gov.

Technorati Tags: floor plan financing, Floorplan Financing, SBA, Small Business Administration

KOKOMO, IND. – The U.S. Small Business Administration will offer government guaranteed loans to finance inventory for eligible auto, recreational vehicle, boat and other dealerships under a new pilot program announced today by SBA Administrator Karen Mills.

Dealer Floor Plan (DFP) financing will be available beginning July 1, according to Mills. She announced the new program during a visit to Kokomo, Ind., with Dr. Ed Montgomery, President Barack Obama’s Director of Recovery for Auto Communities and Workers.

“Countless small businesses, including dealerships, across the country are facing significant challenges as a result of the uncertainty in the auto industry,” Mills said. “Floor plan financing can offer some dealerships the opportunity to get through these tough economic times by allowing them to keep their inventory and cash flow intact, as well as save the jobs these small businesses provide.”

Mills and Montgomery discussed the new DFP pilot program, as well as other resources offered by SBA and the federal government to help small businesses in communities impacted by the troubles facing the auto industry.

“Small businesses are the engine of our economic growth,” Dr. Montgomery said. “We are committed to finding ways the federal government can cut through red tape and get resources to these companies quickly during these tough economic times. From supporting nearly $4 billion in lending to small businesses across the country since February to the Dealer Floor Plan financing announced today, the SBA is making the resources provided in the Recovery Act accessible and working to provided needed credit. The President is committed to continuing to work with federal officials to identify resources like these that make a real difference in the lives of our auto communities and workers.”

Floor plan financing is a line of credit that allows dealers to borrow against their inventory, and then repay that debt as they sell their inventory or borrow against the line of credit again to add new inventory.

Under the DFP pilot program, the SBA will provide loan guarantees for lines of credit through its 7(a) program. DFP loans will be made through SBA lenders only for titleable inventory, including autos, RVs, manufactured homes, boats and motorcycles. The pilot program will begin July 1 and will be available through Sept. 30, 2010, at which time the SBA will make the determination of whether or not to extend the program.

DFP loans will be available for a minimum of $500,000 up to the $2 million allowable under the 7(a) program. With a maximum repayment term of five years, the loans will come with a 75 percent government guarantee. Borrowers will also benefit from the temporary elimination of fees on 7(a) loans made possible by the America’s Recovery and Reinvestment Act of 2009.

During a roundtable discussion later in the afternoon with local small business owners Mills provided information on other SBA loan programs and benefits provided by the Recovery Act. Specifically, small business owners can take advantage of higher government guarantees on some 7(a) loans, as well as reduced fees on both 7(a) and 504 loans. The agency is also providing more tools to help small businesses compete for federal government contracts, along with technical assistance and counseling for business owners and entrepreneurs to help them deal with the economic challenges they face.

“We are committed to being the real partner small businesses need at this critical time,” Mills said. “Floor plan financing is just the latest tool in our toolbox to help small businesses in communities like Kokomo weather this recession and drive our nation’s economic recovery.”

Documents:

dfp_fact_sheet

dfp_faqs

dfp_pressrelease_052809

Technorati Tags: floor plan financing, Floorplan Financing, Inventory Financing, SBA, Small Business Administration

WASHINGTON (May 1, 2009) – The following is a statement from John McEleney, chairman of the National Automobile Dealer Association, on the expansion of eligibility for a Small Business Administration loan guarantee program designed to help small businesses get access to working capital:

“By significantly expanding the SBA 7(a) loan guarantee program, the President along with SBA Administrator Karen Mills and her staff, have taken a significant step toward unlocking the frozen credit markets that are so critical to the success and continued operation of thousands of small, family-owned dealerships across the country. The newly expanded SBA 7(a) program should encourage lenders to assist thousands of additional dealers with the liquidity they need to keep their doors open, make payroll and prevent further layoffs, especially in these difficult economic times.

“NADA, which is encouraged that the SBA has expanded their loan-guarantee program, will continue to work with the Obama administration to lift the existing regulatory prohibition on vehicle inventory financing (floorplanning). Removing this constraint would enable lenders to make floorplan loans to those many small dealers currently finding it difficult to secure the funds they need to purchase new vehicle inventory.

“The nation’s franchised auto dealers-both domestic and international-applaud the Administration for its actions and its understanding that, unless the dealer credit problem is fixed, any effort to revitalize the auto industry simply will not work.”

BACKGROUND: NADA Chairman John McEleney, members of NADA’s executive committee and senior staff, along with leaders from the National Association of Minority Automobile Dealers (NAMAD), met several times with SBA since Nov. 2008 to advocate a more inclusive size standard for dealers seeking access to the 7(a) loan program. These meetings led to the SBA action, discussed above.

In the American Recovery and Reinvestment Act (ARRA), enacted earlier this year, Congress raised the ceiling on 7(a) loan guarantees to 90 percent and reduced or eliminated borrower fees. This has prompted an increase of 25-plus percent in loan volume and sparked the return of hundreds of lenders to the market. Together, the ARRA and the SBA’s new size standard should enable more dealers to obtain working capital under the 7(a) loan program.

NADA is continuing to work with lenders to encourage them to make 7(a) loans to dealers and with the Obama administration to allow proceeds from these loans to be used for floorplan financing.

Source: www.nada.org
Contacts:

David Hyatt
Vice President
NADA Public Affairs
(703) 821-7120
dhyatt@nada.org

Charles Cyrill
Director of Public Relations
NADA Public Affairs
(703) 821-7121
ccyrill@nada.org

Technorati Tags: floor plan financing, Floorplan Financing, NADA, National Automobile Dealer Association, SBA

NEIL ROLAND
AUTOMOTIVE NEWS
APRIL 27, 2009 – 12:01 AM ET

WASHINGTON — The Obama administration is exploring ways to expand financing to car dealers, the head of the National Automobile Dealers Association said Friday. NADA Chairman John McEleney said members of the auto task force told him they are trying to find ways to let dealers borrow money to buy new cars from manufacturers.

One option the task force is looking at is working with the Small Business Administration, said McEleney, who met with task force adviser Ron Bloom and others on Thursday, April 23. “The task force wants that to happen, and they’re trying to find avenues, including through SBA,” McEleney said in an interview.

NADA did not request a specific figure, he said.

Source: Automotive News

Technorati Tags: floor plan financing, Floorplan Financing, John McEleney, SBA

NEIL ROLAND
AUTOMOTIVE NEWS
APRIL 24, 2009 – 3:39 PM ET

WASHINGTON — The Obama administration is exploring ways to expand financing to car dealers, the head of the National Automobile Dealers Association said today.

NADA Chairman John McEleney said members of the auto task force told him they are trying to find ways to let dealers borrow money to buy new cars from manufacturers.

One option the task force is looking at is working with the Small Business Administration, said McEleney, who met with task force adviser Ron Bloom and others yesterday.

“The task force wants that to happen, and they’re trying to find avenues, including through SBA,” McEleney said in an interview.

The dealers group did not request a specific figure, nor did the task force offer one, he said. Task force members did not commit to providing aid or specify a deadline by which they would decide, McEleney said.

The SBA confirmed that the agency is looking into expanding aid to automakers.

“We are looking seriously at whether there can be changes in the program and considering making changes that would allow the loans that NADA is seeking,” said SBA spokesman Mike Stamler.

A White House spokeswoman did not immediately respond to a request for comment.

SBA guidelines limit aid eligibility to dealers with less than about $29 million in annual revenue, Stamler said. An average dealer’s revenue is about $40 million to $45 million, McEleney said.

Dealers typically obtain floorplan loans from captive finance companies, national and regional banks, and credit unions. The lenders obtain their capital from a variety of sources, including securitized loans.

NADA has unsuccessfully sought assistance from the administration’s Term Asset-Backed Loan Facility, which provides backing for consumer and small-business loans.

TALF funds AAA-rated securitizations, in which loans are bundled and sold to institutional investors and financial institutions. But floorplan securitizations, in which lenders bundle dealer loans into asset-backed securities, are rated below investment grade.

General Motors has prepared plans to reduce the number of dealers to 4,100 from 6,200 by 2014.

About 900 U.S. dealers went out of business last year, leaving around 19,000 today. McEleney estimated that 1,200 will go out of business this year.

Source: Automotive News

Technorati Tags: floor plan financing, Floorplan Financing, National Automobile Dealers Association, SBA

Contact Your U.S. Senators and Urge Them to Support
Small Business Administration (SBA) Loans
for RV Floorplan Loans

Click Here for a Sample Letter

RV dealers and their volunteer leaders agree: the number one issue facing the RV industry is financing.   The Obama Administration must turn its attention on the severe impact of the credit crisis on RV dealers and the urgent need for floorplan credit.  Without retail credit and floorplan loans, even well-capitalized dealers can be out of business.  Preserving floorplan lending is essential to keeping dealers in business and purchasing new RVs. The RV industry will not recover until the retail credit and floorplan problem is fixed.

RVDA is urging the President and Congress to support the following policy recommendations.  These recommendations also have the support of the National Automobile Dealers Association (NADA).

1. Expand access to Small Business Administration (SBA) lending capacity for dealers.  The Administration has the statutory authority to expand the SBA size standard that today excludes many dealers.  Also, the Administration has the statutory authority to allow SBA’s guarantee program to be used for floorplan loans that currently are ineligible under the program. An emergency directive implementing these two changes would increase access to credit for small business dealers all across the country.

2. Restore liquidity for RV retail and floorplan lenders. Work with the Federal Reserve Board to make sure that the Term Asset-backed Securities Loan Facility (TALF) injects essential liquidity by revitalizing securitization of RV retail and floorplan loans. If TALF is too cumbersome to meet this objective in the short term, then create another mechanism to restore lending in these areas. Time is of the essence.

President Obama’s pick for the SBA’s new administrator, Karen Mills, told Senators at her confirmation hearing that she “would be very interested” to look at the SBA floorplan loan policy “quickly and see what the possibilities are to help.” It’s time to urge the Administration and Congress to transfer those words into action.

Please contact your U.S. Senators and urge them to support changes in SBA loan policies that can help RV dealers.

To contact your U.S. Senators click here.

RVDA will post regular updates and more information at www.rvda.org. Thanks for your support.

Mike Molino, CAE
President, RVDA

Technorati Tags: Floorplan Financing, Floorplan Loans, National Automobile Dealers Association, SBA, Small Business Administration