A SBA pilot loan program aimed at increasing access to inventory financing for auto, boat, RV and other dealerships will re-launch Feb. 8.
The Small Business Jobs Act of 2010 included a provision for re-launching the SBA's Dealer Floor Plan Pilot Loan program, which first became available in July 2009, according to the SBA. The pilot is part of the SBA's overall 7(a) loan guarantee program. The Jobs Act also increased the maximum size for 7(a) loans to $5 million, up from $2 million, which includes loans made through the DFP pilot program.
Floor plan financing is a revolving line of credit that allows a dealership to obtain financing through SBA's 7(a) program for inventory that can be titled, such as autos, RVs, manufactured homes, boats and trailers. As each piece of collateral is sold by the dealer, the loan advance against that piece of collateral is repaid. As the loan is repaid, the dealer can borrow against the line of credit to add new inventory.
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