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RVIA Applauds SBA Move on Floor Plan Lending

RVIA’s efforts to expand the availability of credit to RV manufacturers, suppliers and dealers resulted in a key victory on an important front today when the Small Business Administration (SBA) announced that, effective July 1, it will waive the floor plan lending prohibition that is currently part of its 7(a) loan guarantee program, and will guarantee dealer floor plan (DFP) loans.

“RVIA has worked diligently over the past several months to have the SBA include floor plan loans in 7(a) loan guarantee program,” said RVIA President Richard Coon.  “We are very pleased with the SBA announcement today and believe that the improved availability of credit for RV dealers through this program will benefit the entire industry.”

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 titleable inventory, including autos, RVs, manufactured homes, boats and motorcycles. The pilot program will begin July 1 and will be available through September 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.

Earlier this spring, the SBA also announced an expanded size standard for its 7(a) loan program, a change that means that more than 70,000 additional small businesses – including approximately 75 percent of RV dealers – are now eligible to apply for an SBA 7(a) loan.  Under the new guidelines, 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.

RVIA and industry partners worked closely with Senators Bayh (D-IN), Lugar (R-IN), Merkley (D-OR) and Wyden (D-OR) and Representatives De Fazio (D-OR), Donnelly (D-IN) and Souder (R-IN) to urge the SBA to incorporate floor plan lending into its 7(a) program.  “We are very appreciative of their assistance and the efforts made on behalf of the RV industry,” said Coon.

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