MENU
SEARCH
WASHINGTON - President Obama has signed legislation that will raise limits to $5 million on federally guaranteed loans available to thousands of small auto dealers as the administration attempts to loosen credit in a sputtering economy, reported Automotive News.
The previous floorplan financing limit in the U.S. Small Business Administration pilot program was $2 million.
The 17-month-old program hasn't gotten off the ground because banks, credit unions and other lenders have been reluctant to participate.
The Obama-backed bill, which contained provisions aimed at creating jobs as well as easing credit, passed the House and Senate over almost completely unified Republican opposition as the Nov. 2 congressional elections approach.
"We still need banks to lend," said Bailey Wood, spokesman for the National Automobile Dealers Association. "The fact is, many credit worthy dealers are still having a tough time getting the credit they need to purchase vehicle inventory."
The floorplan financing provision is part of a section that will raise loan limits for all qualified small businesses.
"It's a great victory for America's entrepreneurs," the president said.
Under the new law, the portion of each loan that is backed by the federal government will remain 75 percent.
The law waives lender fees to the government of as much as $54,000 on a $2 million loan, SBA spokesman Michael Stamler said. These fees can be passed on to dealers.
More than half the 18,000 dealerships in the United States will qualify as small businesses for the floorplan financing assistance, Wood said.
To qualify, dealerships must have average net income of less than $3 million after taxes and tangible net worth of $8.5 million or less, he said. Only 61 SBA-backed floorplan loans totaling $61 million have been approved for dealerships, Stamler said.
Lenders have cited government red tape and fees, their own staffing constraints and lack of familiarity with floorplan financing.
The SBA program, which began in May 2009, will expire in September 2013 under the new law.
Dealers should aim to build a positive work environment, helping employees execute an efficient experience, from their online research to the final delivery of the vehicle.
Read More →
A cloudy April forecast was expected due to last April’s sales surge in anticipation of U.S. trade tariff-inflated prices. Meanwhile, automakers pumped up incentives to address today’s consumer wallet woes.
Read More →
EREVs, also known as ‘series hybrids,’ may catch on in the U.S., where they currently have barely a toehold, as automakers tilt away from some purely electric models and consumer crave more range.
Read More →
A recent price spike due to several larger market forces, though it hasn’t dulled demand, is pushing more consumers to efficient models to squeeze in buys.
Read More →
A group out West picked up the major D.C.-area collection, putting it in the upper tiers of private automotive groups in the U.S.
Read More →
Lenders loosened access for subprime borrowers, and consumers with negative equity reached a record high, Cox Automotive reported.
Read More →
U.S. consumer interest in electric vehicles lags behind other countries despite the rising gas prices caused by the ongoing war in the Middle East.
Read More →
Research reveals the brands and models most likely to have higher recall rates over their lifetimes. While some brands rank high, addressing safety issues can be a selling point.
Read More →
Cox Automotive research shows both the opportunities and the challenges in turning consumers’ growing affordability needs into increased fixed-operations revenue.
Read More →
The partner you choose for growth and expansion is key, because better is the ultimate goal instead of growth for growth’s sake.
Read More →