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NADA Lobbies for Changes to SBA Floorplan Financing Program

October 29, 2009

WASHINGTON — The National Automobile Dealers Association has urged the U.S. Small Business Administration to expand loan amounts and guaranties under the Dealer Floor Plan Pilot Initiative, which launched in July and will continue through September 2010.

NADA wants to increase the maximum floorplan loan amount from $2 million to between $5 million and $10 million and reduce the minimum amount from $500,000 to $100,000. The SBA currently guarantees up to 75 percent of the maximum loan amount, the NADA would like to see guaranties increased to 90 percent.

The association based its recommendations partly on the results of a survey of 40 banks, captive and nonprime finance companies, credit unions and dedicated floorplan financing companies. Seeking reasons for an underwhelming response to the DFP pilot program from the lending side, NADA found that nearly half of survey respondents were not actively funding floorplan loans and only a few of those were considering it.

In addition to changes to the loan amounts, NADA also would like to extend the life of the program to three years or longer, allow DFP loans to be eligible for securitization, and create a database of floorplan financiers in the market for new applications, among other recommendations.

The full text of the letter, links to the survey results and NADA’s full list of recommended changes to the DFP program can be found at NADA.org.

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