MIAMI BEACH - Marine dealers are in great need of new sources of financing, and if they know where to look and how to present their cases to banks that may be unfamiliar with the industry, they just might find new funding, according to Bill Thompson, a recreational lending expert with Cardinal Points Network, a firm that helps dealers, manufacturers and lenders develop profitable and lasting relationships.
Thompson's seminar, held Tuesday at the International BoatBuilders' Exhibition & Conference, was the second of three planned specifically for dealers.
With only two national lenders - GE and Bank of America - left in recreational floorplan lending, it's imperative that dealers look beyond the big banks for help. But, he cautioned, it's also important to know how to approach local lenders.
Be prepared to provide an executive summary of your business, a business overview, three-year financial history, detailed credit request, biographies of executives, customer demographic information, an inventory report and a manufacturer report.
Be sure to inform them about repurchase agreements with manufacturers. It makes backing a dealership seem less risky.
"Tell them what you want," Thompson said. "Remember, they're not used to your business."
He recommended looking at smaller local banks with five to 10 branches.
It may be more prudent to request a line of credit, rather than a floorplan, he said. Banks are likely more familiar with lines of credit and how to set those up than they are with the intricacies of floorplanning.
In regard to the Small Business Administration's dealer floorplan program, Thompson noted that most bankers "don't get it," and it does include some requirements that can make it cumbersome and difficult to qualify.
Aside from SBA loans, Thompson noted that dealers in rural areas may qualify for term loans up to $10 million from the U.S. Department of Agriculture.
He also recommended dealers use available industry resources - such as the National Marine Manufacturers Association's statistical abstract, Discover Boating materials to show the joy of boating, or an industry executive summary from the National Marine Bankers Association - to help make their cases and introduce bankers to the boating industry.
In the new reality, he said, collateral values are going to be treated differently, smaller lines of credit will be available, and there will be larger dealer territories and more stringent requirements.
— Beth Rosenberg