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SBA Working to Guarantee Floor Plan Loans

With the nation’s credit freeze continuing to be the top challenge facing the RV industry, RVIA and its industry partners have been working diligently on several fronts to expand the availability of credit to RV manufacturers, suppliers, and dealers. RVIA’s efforts gained momentum this week with the Small Business Administration (SBA) now considering waiving the floor plan lending prohibition that is currently part of its 7(a) loan guarantee program.


The SBA is considering plans to change current policy that precludes financing of RV floor plan loans through the 7(a) loan guarantee program.  The SBA would
temporarily permit floor plan lines of credit for assets which are "titleable" (RVs, cars, trailers, motorcycles, and boats). The specific timeline and parameters of the program are still being determined.


RVIA and its industry partners worked in March with Senators Wyden (D-OR), Bayh (D-IN) and Merkley (D-OR) to send a letter to the Acting SBA Administrator requesting a program change.  Senator Lugar (R-IN) and Representative Peter De Fazio (D- Ore) sent letters on the same topic. In a March 31 response to Senator Lugar, the SBA acknowledged that they were "reevaluating their policy precluding the financing of RV floor plan loans."  On April 1, Senator Bayh asked a question on RV floor plan loans at the confirmation hearing of Karen Mills to head the SBA.  Ms. Mills committed to quickly review the floor plan lending restrictions.       


Using their pilot program authority, the SBA plans a "use of proceeds" program to provide dealers with lines of credit through SBA approved bank lenders. As a pilot program, it would need the approval of the Office of Management and Budget (OMB) as well as be subject to a 15-day review period by Congress.


This policy change would help improve the availability of credit for many RV dealers to purchase new inventory from manufacturers. A
Federal Register Notice announcing the program is expected this month.


The expected move to allow floor plan lending comes on the heels of the SBA expanding the eligibility for its 7(a) loan program, which allowed greater access to capital for more RV manufacturers, suppliers and dealers who now qualify as small businesses.

 

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