President Obama’s car czar came to Kokomo, Ind., Thursday (May 28) to announce much needed aid for the state’s auto dealers. But the help is not just for auto dealers. It’s also for hard hit areas that manufacture RVs.
The Small Business Administration (SBA) and President Obama’s car czar announced a nationwide stimulus plan in the heart of Indiana’s auto industry, planting what they hope is a seed in the industry’s recovery, according to WTHR-TV, Indianapolis.
“We’re not giving up on manufacturing and I’m sure the president hasn’t given up on the auto industry,” said Ed Montgomery, director of recovery for auto communities and workers.
The SBA announced that it will back billions in government guaranteed loans to finance inventory for auto, RV, boat and other dealerships. The so-called floor plan financing starting July 1 gives dealers up to $2 million in much needed credit allowing business owners to borrow against inventory.
“These programs all will give dealers the breathing room that they need, the financing that they need to survive these times when sales are a bit down,” said Karen Mills, SBA administrator.
The federal and congressional delegation chose to announce the nationwide pilot program in Kokomo, where Chrysler’s biggest single work force is now coping with the automaker in bankruptcy. The government hopes the dealer financing will create a ripple effect in an industry that employs thousands of Indiana workers.
“Today’s announcement will help to preserve jobs in the auto dealers, auto manufacturers, the supply chain, small businessmen and women who supply the auto industry and in the recreational industry,” said Sen. Evan Bayh, D-Ind.
The new SBA program includes northern Indiana’s Elkhart County’s struggling recreational vehicle industry, accounting for a nearly 20% unemployment rate there.
“This is going to help dealerships be able to buy the products that the customers want to buy,” said Nathan Hart of the Recreation Vehicle Dealers Association (RVDA).
The National Automobile Dealers Association (NADA) and their members call the new stimulus plan a step in the right direction.
With automakers down-sizing dealers and with GM on the brink of bankruptcy, floorplan financing will likely do little to comfort thousands of Indiana auto workers wondering how long they’ll have a job.
One auto dealer said this week that access to credit is a major problem. The SBA said that the loans will allow dealership to keep their inventory and cash flow intact and save jobs.