Beginning today, auto, recreational vehicle and other dealerships can apply for a revolving line of credit financed through the SBA's 7(a) loan program.
The agency's new dealer floor plan program allows financing for inventory that can be titled, such as autos, RVs, manufactured homes, boats and trailers. As each piece of collateral is sold by the dealer, the loan advance against that piece of collateral is repaid. As the loan is repaid, the dealer can borrow against the line of credit to add new inventory.
The loans will be available for a minimum of $500,000 up to the $2 million allowable under the 7(a) program, the SBA said. The pilot program will run through Sept. 30, 2010, after which SBA will determine whether to extend it further.
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The DFP loans can be made by any credit union or other lender already participating in the agency's loan programs. Since the pilot program is a new initiative that provides a guarantee for a specialized product, the SBA said it is working with and training lenders that may be interested in offering this type of financing. For more details, log-on to www.sba.gov.
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