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SBA Expands RV Dealer Loan Eligibility

The Small Business Administration (SBA) has announced expanded eligibility for its 7(a) loan program, meaning greater access to capital for more small businesses, including RV dealers and businesses.

 

RVIA, working alongside industry partners including national and state dealer associations, has been lobbying the SBA to expand the 7(a) lending program to assist the RV industry in these tough market conditions.

 

SBA’s alternate size standard for its 7(a) loan program will go into effect early next week through Sept. 30, 2010. As a result of the temporary change, more than 70,000 additional small businesses – including RV companies and dealerships, – could be eligible to apply for SBA 7(a) loan.

 

“This is just one more step we are taking to make sure small businesses have access to capital to keep their doors open and employees working during these tough economic times,” SBA Administrator Karen Mills said.  “We have seen signs that small businesses that are just outside the traditional 7(a) size standard are being shut out of the conventional lending market.  This temporary change will help those businesses weather these tough times and help move our nation closer to economic recovery.”

 

The temporary 7(a) loan size standard will parallel the standard for the agency’s 504 Certified Development Company loan, and will allow businesses to qualify based on net worth and average income. The net worth for the company and its affiliates can’t be in excess of $8.5 million and average net income after federal income taxes (excluding any carry-over losses) for the preceding two completed fiscal years can’t be more than $3 million. The alternate size standard is available at the offices of The Federal Register today and will be published as an interim final rule early next week. 

 

“We are encouraged that more RV industry companies are now eligible under the new SBA program requirements,” said RVIA President Richard Coon.  “Our focus now will be to continue our discussions with the SBA to permit floorplan lending under the 7(a) program.”

 

The temporary change to the 7(a) loan size standard is not unprecedented. SBA took similar actions in 1993, as a result of the recession of the early 1990s, and again in 2005 as part of a program aimed at helping small businesses in the wake of hurricanes Katrina and Rita.

 

This change also means more small businesses can take advantage of benefits made possible through the Recovery Act.  On March 16, the SBA implemented two key provisions of the Recovery Act that raised the guarantee on 7(a) loans to 90 percent and reduced fees for borrowers.  Since then, the agency has seen average weekly 7(a) loan volume increase by more than 25 percent and new SBA loans made by nearly 450 lenders who had not made loans since October 2008.

 

 

For a list of regional SBA offices that can assist RV companies interested in the SBA loan program, visit http://www.sba.gov/localresources/index.html and click on your state.

 

For more information about SBA’s revisions to its small business size standards, visit http://www.sba.gov/size/indexwhatsnew.html and click on “What’s New about Small Business Size Standards.” 

 

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