SBA expects

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These “floorplan” loans also are available to dealerss thatsell motorcycles, boats, recreational vehicles and mobile homes. Underr the program, the SBA will guarante 75% of a floorplan line of creditfrom $500,000 to $2 The loans will be made throughb the SBA’s network of private-sector The SBA started this economic stimulus prograkm in response to pleas from vehicle whose sources of financing have driedf up this year. U.S. auto manufacturere stopped accepting new requests for vehicleinventory loans, and four majof floorplan lenders started closing existinyg lines of credit.
“We’ve clearly hearxd that there is a need for this type of saidEric Zarnikow, associate administrator for the SBA’zs Office of Capital Access. It’s unclear, however, how many auto dealer will be able to take advantage ofthe SBA’s loans. Only 30% of auto dealeres have vehicle inventories worth lessthan $2 million, the maximu line of credit availablwe through the SBA. Plus, the program may not be attractive enougyto lenders. The economic stimulus legislatiob enabled the SBA to increase its guarantee onregular 7(a) businessz loans to 90%. The guarantee on floorplan loans, is only 75%.
Zarnikow said the SBA decide to offer a lower guarantee on floorplan loans because the agench has never made these types of loansw beforeand didn’t want to take “undue on a pilot program. To participate in the lenders also must have designatedr staff responsible for making and servicintgfloorplan loans, and must have specificv policies and procedures for these types of loans. Small or relativelhy new floorplan lenders canmake SBA-guaranteed floorplan loans only to current These types of loans “require a fair amount of Zarnikow said, since the vehicles serve as the collateral for the linexs of credit.
Zarnikow said the SBA expectss there will bea “ramp-up period” before it starts receiving a lot of loan Many SBA lenders probably won’t participatw in this program, but a “surprisinglh large group” want to learnj more about it, said Jane Palsgrov e Butler, executive vice president of the National Associatio n of Government Guaranteed Lenders. The pilot program will run througbh Sept. 30, 2010. The SBA then will decide whethere to continue the floorplanhloan program.