Jun 11, 2009

Feds Will Offer Dealers Financing

One major fallout of the “credit crunch” is that auto dealerships have found it difficult to fins loans to finance their inventories of new cars and trucks. That has limited economic growth so the U.S. Small Business Administration has stepped in, announcing it will offer government-guaranteed loans to finance inventory for eligible auto, recreational vehicle, boat and other dealerships under a new pilot program. Dealer floor plan (DFP) financing will be available beginning July 1, according to SBA Administrator Karen Mills.

“Countless small businesses, including dealerships, across the country are facing significant challenges as a result of the uncertainty in the auto industry,” Mills said. “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.”

At the announcement, Mills and Dr. Ed Montgomery, President Obama’s director of recovery for auto communities and workers, discussed the new DFP pilot program, as well as other resources offered by SBA and the federal government to help small businesses in communities impacted by the troubles facing the auto industry. The pilot program will be available through Sept. 30, 2010, when the SBA will determine whether to extend the program.

“Small businesses are the engine of our economic growth,” Montgomery said. “We are committed to finding ways the federal government can cut through red tape and get resources to these companies quickly during these tough economic times. From supporting nearly $4 billion in lending to small businesses across the country since February to the dealer floor plan financing announced today, the SBA is making the resources provided in the Recovery Act accessible and working to provide needed credit.”