The Recreation Vehicle Industry Association (RVIA) applauds this week’s relaunch of the Small Business Administration’s (SBA) Dealer Floor Plan (DFP) Pilot Loan Program for the improvements the new effort includes to increase access to inventory financing for RV dealers.
“The relaunched program includes significant enhancements over the original program that RVIA and the RV industry pushed to have included — the new maximum loan size of $5 million, the ability for RV dealers with a higher net worth of up to $15 million to participate, and the extension of the program to three years,” RVIA President Richard Coon stated in a news release. “We are hopeful these changes will remove key barriers to lender participation, thereby attracting more lending sources and providing RV dealers with additional floorplan opportunities.”
The Small Business Jobs Act of 2010 included a provision for relaunching SBA’s Dealer Floor Plan (DFP) Pilot program, which first became available in July 2009. The pilot is part of the SBA’s overall 7(a) loan guaranty program. Key provisions of the relaunched program which RV dealers and lenders may use starting Wednesday (Feb. 9) include:
- A loan amount between $500,000 and $5 million (previously limited to $2 million), for a term of not more than five years.
- A new size standard allowing larger businesses to qualify as a small business under the new DFP, as follows: the maximum tangible net worth of the business cannot exceed $15 million; and, the average net income after federal taxes (excluding carry-over losses) for the two full fiscal years prior to the date of the application for DFP is not more than $5 million.
- An advance rate of up to 100%of the value of the goods to be purchased may be offered by lenders.
- An SBA guaranty of 75% on floorplan lines of credit. In the original DFP, the guaranty for RVs, boats and manufactured homes had been 60%, while autos had the 75% rate. Now, all have the 75% guaranty.
- In addition to the acquisition of titleable inventory for retail sales, loan proceeds can now also be used to refinance existing floorplan lines of credit with another lender or to refinance/replace existing floorplan lines of credit with the same lender.
- An extension of the DFP program to Sept. 30, 2013 (was Sept. 30, 2010).
- A floorplan lender with at least $1 billion in floorplan lines of credit in its current portfolio may qualify for delegated authority under the new DFP Pilot, which will expedite the loan approval process for small business owners and allows more autonomy for lenders. Delegated floorplan lenders can use SBA Express forms and utilize their own policies, procedures, internal controls and documentation.
- “Eligible retail goods” that can be purchased under the new DFP are still automobiles, recreational vehicles, boats, and manufactured homes which can be titled under state law.
“This is the second generation of the SBA DFP Pilot Program,” said Dianne Farrell, RVIA’s vice president of government affairs. “In speaking with SBA staff, they are confident that the enhancements better meet the needs of the banking community and will lead to more floorplan financing options being available to dealerships, which are the cornerstone of many local business communities.”
A coalition of trade associations, including RVIA, the Recreation Vehicle Dealers Association (RVDA), marine, auto, trailer and manufactured housing dealers and manufacturers worked to ensure the new DFP program contained these improvements.
The rules and regulations for the pilot are now available on the website of The Federal Register, and in print editions. A procedural guide to the program will be posted on the SBA website at: http://www.sba.gov/content/dealer-floor-plan-financing-program-0.
Borrowers interested in obtaining a DFP loan should contact their lender or their nearest SBA field office to get a list of SBA-approved lenders in their area who may be participating in the program. Local district offices and contact information, as well as information on this and other SBA programs and resources, can be found at www.sba.gov or by calling the SBA Answer Desk at (800) U-ASK-SBA or TDD (704) 344-6640.