American Guardian’s Dealer Advance Program

No doubt you’ve seen the ads in various industry publications asking, “What would you do with a half-million?” While it’s not a new program, American Guardian Warranty Services Inc. (AGWS) — part of the American Guardian Group — has been working to build awareness of its program, which provides loans to dealers against future sales. AE Magazine decided to go straight to the source and find out more about what the program entails and how it works, and how agents are involved in the process.

While not necessarily unique in the industry, AGWS has created and refined over the years a program designed to help dealers get the resources they need to grow their business. The program is, at its heart, an advance on dealer commissions. But the money can be used for anything from expanding operations, to obtaining inventory, and even to personal expenses. AGWS doesn’t put restrictions on the loans; participants are allowed to use the cash advance however they see fit.

Not every dealer who applies for the program is accepted — in fact, according to Rogers Freedlund Jr., president, CEO and chairman, American Guardian Group, only around 40 to 50 percent of applicants are accepted. And most of those come from the company’s agents, who can identify dealers who meet the program’s strict criteria.

Finding the Right Fit

For the most part, AGWS is looking for new-car franchises, as well as a personal guarantee from the dealer that the funds will be paid back. The company also looks very carefully at a dealership’s finances before accepting them into the program.

It works by allowing dealers to take a cash advance against their commissions, with AGWS taking a security interest in the dealer’s reinsurance program. Typically, dealers have 3–5 years to pay back the loan. The amount of the loan is based, Freedlund noted, on the amount of AGWS product that dealer is expected to sell in the loan period. Many, he pointed out, pay the loan back much quicker than the terms call for, and many of those take advantage of the program more than once — Freedlund noted that he’s had some dealers come back as many as four times.

Freedlund pointed out that, in AGWS’s long history of doing this program, while it has been refined over the years, they’ve never had a dealer fail to pay back the loan. “Once [agents have] done a deal or two, they know what we’re looking for,” said Freedlund. “We’re going to look at the finances to make sure [the dealer] can pay us back. That’s why it works and we don’t have the failures.”

The program, he went on to explain, hinges on the fact that AGWS is looking to build long-term relationships with dealers, and help them grow. And agents benefit because they have a long-term customer as well, who is happy and growing.

“We are providing a way for our dealers to expand and grow their business, and by doing that, we grow and expand as well,” Freedlund said. “As they grow, that’s additional business for us. We’re a company that is very much interested in long-term relationships with dealers and agents. It’s a great thing to assist them with their business, and then we grow ours. It has worked out really well for us.”