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Dealerships to get special SBA financing

Auto, RV, manufactured-home, boats, and motorcycle dealers may be eligible to get special financing under a new pilot carsprogram of government-sponsored loans, according to an announcement by Small Business Administrator Karen Mills. The financing—Dealer Floor Plan Financing (DFP)—is a line of credit that allows dealers to borrow against their inventory, then repay the debt as they sell the inventory, or borrow against the line of credit again to add new inventory. The pilot program will begin July 1.

Under the DFP pilot program, the SBA will provide loan guarantees for lines of credit through its 7(a) program. DFP loans will be made through SBA lenders only for titled inventory, including autos, RVs, manufactured homes, boats and motorcycles.  The pilot program will begin July 1 and will be available through Sept. 30, 2010, at which time the SBA will make the determination of whether or not to extend the program.

DFP loans will be available for a minimum of $500,000 up to the $2 million allowable under the 7(a) program. With a maximum repayment term of five years, the loans will come with a 75 percent government guarantee. 

Borrowers will also benefit from the temporary elimination of fees on 7(a) loans made possible by the America’s Recovery and Reinvestment Act of 2009.

For more information, go to http://sba.gov/floorplanfinancing/index.html.

Source: U.S. Small Business Administration, www.sba.gov


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