Senator Olympia Snowe Commends Decision to Make SBA-Backed Loans Available for Floor Plan Financing

May 28, 2009 -- Washington, D.C. -- U.S. Senator Olympia J. Snowe (R-Maine) today praised the Small Business Administration (SBA) for establishing a pilot program that will allow automobile, boat, RV and other dealerships to access SBA-backed loans starting July 1, 2009. Called the Dealer Floor Plan (DFP) program, the initiative will afford dealerships who sell title-able items the ability to borrow against their inventory and repay the debt as they sell their products.

"Today’s announcement by Small Business Administration (SBA) Administrator Karen G. Mills will benefit thousands of auto, boat, and RV dealers nationwide and here in Maine who, given the severity of the economic crisis, are desperately in need of immediate credit," said Senator Snowe, the Ranking Member of the Senate Committee on Small Business and Entrepreneurship.

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"Considering that nearly 95 percent of vehicle inventory purchases are made through financing, access to SBA loans will play a critical role in keeping many dealerships’ doors open. In Maine, this action will particularly help boat dealers navigate the choppy waters of the recession by providing them a lifeline to stay afloat during these challenging times."

The pilot initiative, which will be available to dealers of products requiring titles, such as boats, automobiles, RVs, trailers, and motorcycles, will be in effect through Sept. 30, 2010, at which time the SBA will determine whether or not to extend the program. Floor plan loans will be available for a minimum of $500,000 up to the $2 million allowable under the SBA’s flagship 7(a) lending program. The loans have a maximum repayment term of five years, and carry a 75 percent government guarantee.

This action follows another recent announcement that the SBA will temporarily alter its size standard requirements to offer car and RV dealers, among others, to access SBA-backed loans. Both of these actions come as a result of an April 8 letter that Ranking Member Snowe co-authored with Committee Chair Mary Landrieu (D-La.), along with Senators John Thune (R-SD), Jeanne Shaheen (D-NH), and others, urging President Obama and the SBA to take both of these steps.

Source: Senator Olympia J. Snowe