Dealers in need of inventory financing can tap a new federal program starting today.
The Dealer Floorplan Pilot Program, an initiative of the Small Business Administration, will guarantee inventory lines of credit between $500,000 and $2 million. The agency will start to review and approve applications starting next week.
Here are some guidelines of the program:
• Dealers of titleable assets — including autos, motorcycles, boats, RVs, and manufactured houses — may apply
• Loans are guaranteed up to 75% (not the 90% level specified by the Recovery Act)
• Lenders may charge a servicing fee higher than the 2% allowed by SBA regulations
• Advance rates guaranteed by the SBA are 90% on new-vehicle inventory and 80% on used-vehicle inventory (lenders may offer higher advances, but the SBA will only guarantee 75% of the approved advance amounts)
Click here for the Federal Register article: Dealer Floorplan Pilot.pdf
