Dealers say finding lenders for SBA program is difficult


When the Small Business Administration announced a new dealer floorplan loan program several weeks ago, it was heralded by industry leaders as a way to ease the credit crunch.

Since then, many dealers have complained that they can't find SBA-approved lenders that offer floorplan financing.

Industry leaders continue to praise the program, however, and say dealers need to put more effort into educating the banks about floorplan financing and about their business.

"We really do feel the SBA floorplan loan program is a first step in improving access to credit for dealers," said Cindy Squires, legislative counsel for the National Marine Manufacturers Association, in a conference call Wednesday afternoon to address these concerns.

"It is going to be a process of educating a lot of regional banks," she continued. "It's not going to be a matter of just flipping a switch."

As of July 1, dealer floorplan loans are available for a minimum of $500,000 up to $2 million under the SBA 7 (a) loan program. With a maximum repayment term of five years, the loans will come with a 60 to 75 percent government guarantee.

Phil Keeter, president of the Marine Retailers Association of America, said a lot of dealers have called their local banks and have not pursued this as much as they should. "You're going to have to make a presentation for them to do it," he said.

Jim Coburn, president of the National Marine Bankers Association, said dealers need to develop a game plan.

"Look for those who are SBA approved, make an appointment to see them, and tell them about your business and your industry," Coburn said. "Have a business plan and have your data with you. Some of these banks don't really know what floorplan lending is. It does take a lot of work on the dealer's part to get this done. It is relationship building."

Even Sloan Coleman, a representative from the SBA, said one of the toughest parts of this program is finding a lender and educating different departments within the bank.

"The floorplan lending department of a bank knows nothing about SBA, and the SBA department knows nothing about floorplan lending," he said. "Understand, the program is so new that lenders are still reviewing the information."

Coleman said that as floorplan lenders who offer SBA loans become known, that information should be shared among the trade associations and throughout the industry.

"We're trying to get the word out as much as possible," said Squires. "Some manufacturers are talking with lenders on behalf of their [dealer] networks."

One other common complaint among dealers is that the lending requirements are too stringent. Some have said banks require all interest, fees and curtailments to be paid and current with the present lender, and last year's financial statements must show a profit. Dealers say it might be difficult in this economic environment to meet those requirements.

"We did not impose a requirement that the business had to show a profit in the last year. The lender establishes the criteria," said Coleman from the SBA.

Squires said the banks simply want to make sure the business is financially sound and that there is some assurance it will continue as a going concern.

— Melanie Winters


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