SBA details floorplan loan program

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The National Marine Manufacturers Association hosted a conference call Wednesday to address questions about a new floorplan financing program offered through the Small Business Administration. Soundings Trade Only participated in the conference call.

Under its new Dealer Floor Plan pilot program, SBA will provide loan guarantees for lines of credit through its 7(a) program. DFP loans of $500,000 to $2 million will be made through SBA lenders. These lenders can charge one of the authorized SBA base rates, such as prime plus up to 2-1/4 additional points.

The program 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 inventory is sold and can borrow against the line of credit to add new inventory.

Many of the questions in the conference call centered on which banks will offer these loans and how to find them.

“We don’t have great intelligence yet on who is going to participate in this,” said Grady Hedgespeth, from SBA’s Office of Financial Assistance. “It’s probably going to be embraced most by lenders who are already engaged in floorplan lending.”

He also said the lenders who offer these SBA loans are more likely to work with borrowers they already know well.

Hedgespeth suggested checking the SBA Web site to find the nearest SBA district office for a list of approved lenders. Marine companies also may be able to work with their existing lenders.

The first thing borrowers need to find out is if an SBA-approved lender has a floorplan financing department, said Hedgespeth, or ask their existing floorplan lender if they work with SBA.

“See what resources are available that already know you,” he suggested.

The National Marine Bankers Association offers tips on how to develop a relationship with a banker to improve a company’s chances of getting approved for a loan, said NMBA president Jim Coburn, who participated in the conference call.

The conference call was limited to the first 100 participants. That limit was reached before the call began, so NMMA officials said they likely will arrange another conference call with the SBA.

— Melanie Winters

m.winters@tradeonlytoday.com

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Comments

9 comments on “SBA details floorplan loan program

  1. Noel Osborne

    Nothing ever ends up as good as it initially appears. This was being touted as  a Line of Credit and it now appears that it is some type of a floorplan as the SBA says”The first thing that borrowers need to find out is if an SBA-approved lender has a floorplan financing department”. We all know that virtually no lender is now engaged in marine flooring. Leave it to the government to come up with a program that will help very few, if any, marine dealers. When they have the next conference call someone needs to ask the hard questions, not softballs. Let’s find out exactly how this is going to work for the vast majority of marine dealers that need help right now!!

  2. john Lucius

    The SBA floor plan program is a good start for helping the small marine retailer. NMMA should be comended for the effort along withthe SBA.
    There also needs to be a program to help the small boat manufacturers. Cash flow is a big issue in these economic times. The small manufacturers continue to supply many boats into the market. I would indentify small as manufacturers under five million in sales.
    Thanks for the hard work and concern for our industry
    John Lucius

  3. Tom Fischer

    I encourage every dealer to pursue this, however I will tell you that I have. The first hurtle is just finding a bank that understands your business and your needs, and participates with the SBA program.Most don’t.
    Then, if you find one they must also have a “floorplan department”. Most don’t.
    Good luck on getting past those 2 first hurtles. If you do………
    Then you must meet the requirements of the banks underwriting guidelines. In case you aren’t aware we(boat dealers) are classified by most banks as a “high risk” industry and have been since before the economic melt down.
    To qualify for help now they require healthy current financials, you must be currently profitable, you must be up to date on all credit obligations including suppliers, floorplan interest, curtailments, etc. In so many words, you must look like you did 3 years ago when we were all on a roll.
    Someone needs to step in a give this “marine stimulus plan” a new set of guidelines that includes forcing the the floorplan companies to help dealers not hinder them and banks backed by SBA to ease the qualification criteria.
    Dealers need assistance NOW! Tomorrow may be too late.
     
     

  4. Bill Mac

    Have a problem with the word “Small”. The dealers I am associated with, as well as myself have a problem with the $500,000 minimum floor plan. We deal in small boats, ( average $4500. ) and need a minimum around $100,000.  Trying to keep inventories down, and order as we go, we rarely peak at maybe $150,000, and dip below even the $100,000 most of the time. Fortunately, the builders have recognized that we can not always take truckloads, and have been working with us on an “as needed” basis. We stay loyal to them, and they work with us.
     
    Bill

  5. Curtis

    The SBA program sounds great. The problem is I have not found one lender that is going to particapte in the program. If anybody knows of a lender please let me know.

  6. Larry

    THE OLD TOO USUAL WHICH WE ARE, ALL TOO WELL FAMILIAR WITH, AND LIKE TOM MENTIONED, YOU NEED TO LOOK AND BE IN A POSITION WHERE, YOU DON’T NEED THE MONEY TO BE OFF THE “RISK” THE BANKS HAVE ALWAYS PLACED, OR DESIGNATED MARINE (and pretty much a lot of other folks) BUSINESSES TO BE.
    NEVER MIND FINDING THE RIGHT INSTITUTION !
    LETS FACE IF ALL OUR BOOKS WERE CAUGHT UP TO DATE, OUR FLOOR PLAN WAS IN THE BLACK, AND OUR DEBT WAS NON EXISTEND, WHY IN THE WORLD WOULD WE NEED THE THE SBA OR BANKS TO HELP? THIS IS AN ECONOMY IN CRISIS AND PRETTY MUCH EVERYONE IS IN THE SAME BOAT, (pardon the pun), BESIDES THE WAY IT HAS BEEN INITIATED BY THE GOVERNMENT, WASN’T IT SUPPOSSED TO BE “AN STIMULUS” ACTION?
    WE SHOULDN’T GET TOO UPSET AFTER ALL, WHEN HAS IT EVER BEEN EASY, TO FIND BIG BANKERS SO WILLING TO HELP THE MARINE INDUSTRY?

  7. Mike R.

    Noel is on the money on this. The only ones who will likely be helped by this program are the bureaucrats who will be hired by the Obama cronies  to administer a plan that is fatally flawed from day one. What you will never likely hear is what it will cost the taxpayers to fund  these do-less government jobs to basically oversee non-existant loan activity. Also can’t imagine what the compliance costs would be for any banks who might dare consider participating.
    Hope the marine industry is not depending on this new “help from the government” to bail us out. It is painfully clear that whoever dreamed this up has no clue about how the real world functions. It sure is reassuring to know that these same great minds will soon be making our health care decisions and legislating what cars we can drive. I suspect that most of those now in power won’t lose much sleep over the reality that all us rich people are likely to lose our boats…. and jobs.

  8. Vince Morvillo

    As for the SBA floorplan program. First step is to find a bank who will do SBA lending. I have called all of them listed in Houston, Texas, my home. I got the same repsonse from each bank “We have chosen NOT to participate in the SBA Floorplan Program”. I think NMRA needs to bring these facts to the attention of President Obama’s stimulus director.
    More disconcerting than the above is that I have left three messages over the past three weeks for the area director of SBA, still no return phone call. The person answering the phone informed me that they knew nothing of an SBA floorplan support. I was hoping the regional director had the direction and could lead me to a bank, apparently this couldn’t happen either.
     

  9. Auto dealer financing software

    If they are going to offer the money for dealerships, it’s worth pursuing. It seems that if someone wants to work with the SBA and track down how to make this work, they might be rewarded with a loan.
    -R. HowardDealers First Financial

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