Posts Tagged ‘Small Business Administration’

When the Small Business Administration announced a new dealer floorplan loan program in early June, it was heralded by industry leaders as a breakthrough in solving the credit crunch plaguing the marine industry.

Since then, many dealers have complained that the program does them no good because they can’t find any SBA-approved lenders that offer floorplan financing.

Industry leaders continue to praise the program, however, and say dealers need to put more effort into educating the banks about floorplan financing and about their business.

“We really do feel the SBA floorplan loan program is a first step in improving access to credit for dealers,” says Cindy Squires, legislative counsel for the National Marine Manufacturers Association. “It is going to be a process of educating a lot of regional banks. “It’s not going to be a matter of just flipping a switch.”

As of July 1, dealer floorplan loans were available for a minimum of $500,000 up to $2 million under the SBA 7 (a) loan program. With a maximum repayment term of five years, the loans will come with a 60 to 75 percent government guarantee.

Jim Coburn, president of the National Marine Bankers Association, says dealers need to develop a game plan.

“Look for those who are SBA-approved, make an appointment to see them and tell them about your business and your industry,” Coburn says. “Have a business plan and have your data with you. Some of these banks don’t really know what floorplan lending is. It does take a lot of work on the dealer’s part to get this done. It is relationship building.”

Source Trade Only Today
- Melanie Winters

Technorati Tags: floor plan financing, Small Business Administration

SBA floorplan financing

When the SBA announced its dealer floorplan financing program on July 6, the industry described it as “the first step in improving access to credit for dealers.” Three weeks into the program, dealers are still finding it difficult to find banks willing to get involved with dealer floorplan financing.

Dealers trying to take advantage of the SBA floorplan lending program are encountering difficulties in finding local banks that can handle these loans. Even if they[dealers] do find these banks, dealers are saying the SBA approved branch banks are showing little or no interest in lending floorplan money to dealers, even with the 80 percent backing from SBA. Part of the reason for this is a lack of familiarity with what’s required in approving dealer floorplan lending plans.

To provide banks with more concrete information about the dealer floorplan lending program, SBA has completed a checklist and instructions for applying for a 7(a) loan as part of the dealer floorplan program. The Marine Retailers Association of America (MRAA) said in a recent dealer advisory that it expects more banks to look at the 7(A) loan program for dealer floorplans as the application process become better established and financial institutions are more comfortable in making these loans.

Dealers that have questions about the SBA approved banks should call their local field office at 916/735-1986 or e-mail their questions to: 7aquestions@sba.gov.

Source Boat and Motor Dealer

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

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

By Kimberly Johnson
AP Auto Writer
(AP) — A national auto dealers group said Thursday that President Obama’s auto task force is considering extending loans usually reserved for small businesses to dealers, making it easier for them to borrow money to acquire showroom vehicles.

According to the National Automobile Dealers Association, which met with the task force Thursday morning, the government is considering ways to help dealers access money to buy cars to stock their lots. Frozen credit markets have yet to thaw since banks received TARP aid, said NADA chairman John McEleney, causing dealers continued difficulty in acquiring loans and staying afloat.

“There are a lot of departments of government involved, but the task force agrees with dealers that credit is a significant problem,” he said. “They wanted to know if we were seeing improvement in credit and dealer financing. We’re seeing some on the retail side but we still need help with floor plan loans.”

Most dealerships do not qualify for the typical loans from the Small Business Administration, because they have gross receipts of more than $29 million, including sales of cars, service and parts.

“One of suggestions we made to the task force was to go to an employee-based size standard,” said Andrew Koblenz, vice president of legal and regulatory affairs for NADA. “The mechanism they choose doesn’t account for the fact that cars have gotten more expensive over time, but the returns don’t get larger.”

SBA spokesman Mike Stamler said administrator Karen G. Mills indicated during her confirmation hearing earlier this month that the agency would look “seriously” at expanding SBA lending to cover auto dealers. Stamler said there was no timetable yet for implementing such a plan and no details were available, but noted that the SBA used a similar temporary program to help dealers in the late 1970s.

The task force also wanted to know how employees would be affected should one of the automakers file for bankruptcy, NADA VP Koblenz said. Nearly 500,000 are employed at GM and Chrysler dealerships nationwide. A government accountability report on the auto restructuring plans released Thursday said that more than 900 dealers closed in the past year and that dealer employment was down.

A typical dealership employs about 55 people, including technicians. Under current rules, only about 15 percent of dealers, with fewer than 30 workers, would be eligible for a loan, McEleney noted.

“While they wouldn’t all be out of jobs, a lot of them would be,” McEleney said. “They asked if it would have a devastating effect on employment across the country.”

Crain’s Detroit Bussiness

Technorati Tags: National Automobile Dealers Association, Small Business Administration

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