The U.S. Small Business Administration (SBA) plans to offer government guaranteed loans to finance inventory for eligible auto, recreational vehicle, boat and other dealerships under a new pilot program announced in Kokomo, Ind., today by SBA Administrator Karen Mills, according to the Indianapolis Star.
The so-called dealer floorplan financing will be available beginning July 1, according to Mills.
She announced the new program during a visit to Howard County with Ed Montgomery, President Obama’s director of recovery for auto communities and workers.
“Countless small businesses, including dealerships, across the country are facing significant challenges as a result of the uncertainty in the auto industry,” Mills said. “Floorplan financing can offer some dealerships the opportunity to get through these tough economic times by allowing them to keep their inventory and cash flow intact, as well as save the jobs these small businesses provide.”
Floorplan financing is a line of credit that allows dealers to borrow against their inventory, and then repay that debt as they sell their inventory or borrow against the line of credit again to add new inventory.