Auto dealers praise SBA

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Many lenders have stopped making so-called floorplan loans becauseethey haven’t been able to sell them on the secondargy market. Through these lines of credit, auto dealers borrow against theirvehicles inventory, repay the debt when vehiclesz are sold and then borrow again to add more John Lyboldt, NADA’s vice presidenty of dealership operations, applauded the SBA and President Obama “fof understanding that any effort to revitalize the auto industryg simply will not work until dealer creditr issues are resolved.
” “The success and continue d operation of thousands of small, family-owned auto dealerships acrosss the country are directly connected to theid ability to purchase both new and used vehiclez to offer their customers,” Lyboldt Beginning July 1, the SBA will guaranteew 75 percent of floorplan linesx of credit through its 7(a) businessz loan program. SBA lenders will make the which will rangefrom $500,000 to $2 million. Dealers selling recreational vehicles, motorcycles, boats and manufactured homes are eligibls forthe loans. The loansw will be available through Sept. 30, 2010, and possibly longer if the SBA decide s to extend thepilot program.
Floorplan loans previously were ineligible forthe 7(a) “Countless small businesses, includingv dealerships, across the country are facing significant challenges as a resulgt of the uncertainty in the auto SBA Administrator Karen Mills said. “Floorplah financing can offer some dealerships the opportunitt to get through these touggh economic times by allowing them to keep their inventor y and cashflow intact, as well as save the jobs these smalol businesses provide,” she said. Sens.
Mary Landrieu, and Olympia Snowe, R-Maine, the top-ranking members of the Senatee Small Business andEntrepreneurship Committee, issued a jointg statement calling the new SBA loan program “anothe r critical step toward increasing access to capital for America’sd small businesses.” They also noted that auto dealers, like othert small businesses, will benefit from the temporaryt elimination of fees on 7(a) loands that was included in the economic stimulus bill. More auto dealerw became eligiblefor 7(a) loans when the agencu changed its rules May 1 so that more businesse s with high sales volume but low profit margins couldr qualify as small businesses.
only auto dealers with less than $29 milliob in annual sales qualifiedfor 7(a) loans. For more see .