The RV industry could gain extended wholesale financing streams under the Dealer Floor Plan Program Extension and Improvement Act of 2010, introduced by Rep. Joe Donnelly, D-Ind., and Fred Upton, R-Mich.
The legislation would improve the U.S. Small Business Administration’s (SBA) Dealer Floor Plan Financing Pilot Program (DFP) that provides loan guarantees for titleable assets, including RVs, according to the current issue of RVIA Today Express.
The act would improve the DFP by:
- Extending the program for five years, until Sept. 30, 2015.
- Increasing the government guarantee to 90%.
- Giving the SBA the authority to revise the program to address barriers to participation by lending institutions and dealers after consulting with representatives from these industries.
“I’ve heard from dealers, manufacturers and lenders back home that while the Dealer Floor Plan Financing Pilot Program is well-intentioned, it needs to be extended and the government guarantee needs to be raised,” said Donnelly. “This bill would make the changes the RV, auto and marine industries and lenders have identified as necessary to increase participation in the program. I’m pleased to partner with my friend Congressman Upton on the important issue of increasing lending opportunities to Indiana and Michigan businesses.”
“Increasing the scope of the SBA’s Dealer Floor Plan Program would help attract lenders to the DFP program, thereby helping dealers gain additional floorplan opportunities,” said Dianne Farrell, RVIA’s vice president of government affairs. “RVIA and our industry will work diligently to help pass this legislation.”
Under the Dealer Floor Plan (DFP) Financing Pilot Program established in July 2009, the SBA provides loan guarantees for lines of credit through its 7(a) loan program. DFP loans are made through SBA lenders only for inventory that can be titled, such as autos, RVs, boats, and trailers. Currently, the DFP Pilot Program is set to expire on September 30, 2010, and the DFP loan guarantees range from 60-75 percent.
In February, Donnelly hosted an event with members of the RV, auto and marine industries as well as lenders to discuss how the pilot program was going and what could be done to improve it. From these and other conversations with the affected industries, Donnelly and Upton heard that the program would be more successful if lenders knew the program would extend past September 2010, if the government’s guarantee was greater and if industry-cited barriers to participation for both dealers and lenders were addressed