The Small Business Administration has moved toward making more credit available to marine dealers by announcing an increase in the eligibility of its 7(a) guaranteed loans.
Starting this week, the SBA will adopt a change in its size standard for 7(a) loans, allowing a small business to qualify based on net worth and average income. The alternate size standard will temporarily replace the SBA's traditional size standard for 7(a) loans, which varied by industry.
For the marine industry, this meant a marine dealer would only be eligible for the SBA 7(a) loan program if they had total annual receipts of less than $7 million and a boat manufacturer would only qualify if it had less than 500 employees, making many ineligible.
The new alternate standard expands the eligibility for 7(a) loans. As a result, a marine dealer can now qualify for SBA 7(a) loans that can be used for working capital and the refinancing of existing debt if it meets the following:
1. A tangible net worth not in excess of $8.5 million (including its affiliates).
2. Average net income after federal income taxes (excluding any carryover losses) for the preceding two completed fiscal years not in excess of $3 million.
The temporary change in the 7(a) loan program size standard will last until Sept. 30, 2010.
"The expansion in the SBA's loan eligibility requirements is another positive step forward in helping marine dealers secure much-needed access to capital, though more work remains to be done," NMMA president Thom Dammrich said in a statement.
Currently, SBA 7(a) loans cannot be used for floorplan financing. The NMMA and the National Marine Bankers Association are working closely with the SBA to develop a program for SBA 7(a) floorplan loans.
For information, contact Cindy Squires at (202) 737-9766.