SBA To Offer Loans To Auto Dealers

June 17, 2009

Starting July 1, the Small Business Administration is plans to give automobile, recreational vehicle, and boat dealers government-guaranteed loans so they can restock their inventories.

According to a recent press release, the SBA plans to distribute these loan guarantees for credit lines via the Dealer Floor Plan, a measure that is a part of the SBA’s 7(a) loan program.

It was initially publicized in Kokomo, Indiana, by SBA administrator Karen Mills and Ed Montgomery, President Obama’s Director of Recovery for Auto Communities and Workers.

The actual funding for the guaranteed loans was allocated in the provisions of the American Recovery and Reinvestment Act of 2009.

The actual figures provide a range of loans from $500,000 to $2 million that will be established by SBA lenders for titled inventory such as cars, RVs, manufactured homes, boats, and motorcycles. Additionally, these loans will carry the maximum 5-year payment term and they will be guaranteed up to 75% by the U.S. government.

SBA officials have decided to run the program until September 30, 2010 when its effectiveness will be re-evaluated for possible extension.

The SBA program is a new step being taken by the federal government to assist businesses that have been adversely affected by tighter credit restrictions and the recession. Many dealerships across the country have been forced to close their doors due to lower car sales and the sales of other vehicles like boats and RVs.

“Countless small businesses, including dealerships, across the country are facing significant challenges as a result of the uncertainty in the auto industry,” said Mills. “Floor plan financing can offer some dealerships the opportunity to get through these tough economic times by allowing them to keep their inventory and cash flow intact, as well as save the jobs these small businesses provide.”

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Comments

One Response to “SBA To Offer Loans To Auto Dealers”

  1. realife on October 21st, 2009 5:44 pm

    Another BS nonqualifying program by the government,, nobody wants to lend any monies to businesses,,specially auto dealers,,talk about a government that lies to the people who support it and allow them to spend there monies,,the US government,banking and politicians are a JOKE!!!!!!!!!! specially the so called president

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