New SBA provisions broaden inventory loan options for U.S. auto dealers - Nashville Business Journal:

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The 7(a) loans will includde a provisionto “floor plan,” whicy will allow dealers to buy then pay off their loans with the sale of each vehicle. Dealers could previously get SBA loansw for working capitaland refinancing, but coulfd not use them to buy inventory. Thosew loans have traditionally been secured througyh a car manufacturer or a regional Wayne Bell, director of the U.S. Smalo Business Administration Wichita district, says new provisionsx of SBA loans have caught the attentio of dealers andtheir “We’ve seen some interest in terms of but we’ve taken calls from lenders more than he says.
Earlier this SBA announced it would allow any business with a net wortn of lessthan $8.5 million and an average net incomwe of less than $3 million for each of the last two yearsw to be eligible for 7(a) loans. “We believre at least twice as many dealers will qualify undeethese provisions,” says Douglas Greenhaus, spokesperson for the . Greenhauss says the NADA hopes lenders will be less wary of flooerplan loans. Greenhaus says difficult times for the auto industrty have made it tougher for dealersw to get the financin fornew inventory. “There are many regional and national banksz that have gotten out of it he says.
Gary Watkins, seniotr vice president of business bankinfgfor , says SBA backing couldr make a difference. “I think, depending on the levelp of the guarantee, yeah, it might make us take anothetr look,” he says. He says recent turmoil in the auto industry has keptmany lenders, includin Emprise, away from such loans. Empris e has not financed floor plans forany dealers. if it’s a GM or a Chrysler you’d have to be looking over your shoulder asa bank,” he Brandon Steven used an SBA 504 loan to secure financinyg for his Suzuki dealership in east Wichita. He says it was a gruelingt process given all thepaperwork involved, but it workex well for him.
He says his Ford dealership’s floodr plan was financed through His Suzuki dealership was financed through and his dealership got a loanfrom . Stevenj says while many local dealers are stillo able tofind financing, he knows of otheras that appear to be having a more difficulr time. “I know a lot people outside of Wichitaq andI don’t know how some of thesd guys are going to make he says. Chris Simon, senior vice president of Southwest National, says Steven is the only dealerr the bank hasfloor planned. And even with SBA he says they’re not loansw the bank would likely considef inthe future.
He says the loand often require monthly audits of collateral by the And there is always the danger thecars won’ft sell, meaning dealers won’t be able to pay on the “There’s not much upside to it and it’xs very labor intensive,” Simon says. “There’s just a ton of