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SBA accepting floor plan loan applications

November 15, 2010

The Small Business Administration on July 1 began accepting applications from eligible dealerships for guaranteed floor plan financing. The new pilot program runs to Sept. 30, but an extension will be considered.

Loans of $500,000 to $2 million, with a maximum repayment term of five years, can be pursued for dealer floor plan. Borrowers also benefit from the temporary elimination of fees made possible by the American Recovery and Reinvestment Act of 2009.

Floor plan loan guarantees will range from 60 percent to 75 percent, depending on the type of collateral and the lender’s advance rate. Lenders may advance up to 100 percent of a vehicle’s wholesale price.

SBA 7(a) guaranteed loan proceeds may be used for any worthwhile purpose, including working capital and the refinancing of existing indebtedness. Proceeds also can be used to pay applicable fees.

The application process begins with a commercial lender. Dealers may apply to any financial institution that handles SBA 7(a) guaranteed loans and can get a list of participating lenders from SBA field offices located around the country.

A list of lenders participating in SBA’s Preferred Lenders Program can be found on SBA’s Web site, www.sba.gov/services/financialassistance/7alenderprograms/plp/index.html.

 

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