SBA details floorplan loan programPosted on
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.