PUBLISHER’S NOTE: RVBUSINESS.com received this letter – an appeal for help through the press from an imperiled Texas dealership faced with ongoing floor plan credit woes, and we thought we would indeed pass it along.
WE NEED YOUR HELP!!!!!!!!!!!!!
We are a small family-owned recreational vehicle sales & service dealership in Selma Texas. We have been in business for five years. We have been a profitable business for five years due to hard work, dedication, and help from family, friends and financial institutions.
As we know, despite massive infusions of taxpayer dollars, many banks are still not lending to American businesses. Many profitable companies are finding our existing credit lines limited or, worse, eliminated.
We have had a strong relationship with Textron Financial for over three years. Our wholesale financing (floorplan) has increased from $750,000 to $1,450,000 in this short period of time. This has been accomplished due to increases in volume, profits, and credibility.
On October 29th, 2008, Textron Financial sent out a letter to its wholesale RV customers (including us) stating their “commitment to the RV Industry for many years to come. Also stated was that their borrowing costs had risen, but remain strong.” Also, that they have had no difficulty raising capital in order to fund their customers. The letter did mention they had to change some ways they conducted business. For instance, increase in rates and different base pricing structure. I did agree to the changes, and stayed loyal to Textron.
On December 22, 2008, however, we were contacted by a vendor of ours letting us know Textron was leaving the RV lending sector. I researched on the Internet and to my surprise it was true.
So, at that point in time I started looking for other sources for inventory floor plan. Since the banking industry had already started in the downward spiral, you can imagine what I was going through, and still am. No lenders were opening new lines of floor plan credit to RV dealers. I have searched local lenders, friends, and investment groups with no luck. This has put us in a financial crisis. When I sell an existing RV in stock I cannot replace it. I am now in a position I cannot continue operating under these conditions without help. This is the reason for this letter.
Now with the help of Senators Bayh (D-IN), Lugar (R-IN), Merkley (D-OR) and Wyden (D-OR) and Representatives De Fazio (D-OR), Donnelly (D-IN) and Souder (R-IN), the SBA has incorporated “Floor Plan” lending into its 7 (a) program. This had us, for lack of words, “dancing in the street in celebration.”
Now we have started contacting banks and credit unions asking for their help with this SBA-supported program. We have contacted as many as 14 institutions and are getting the same answer: “We still will not loan money for floor plan”.
We have even contacted Kenan Pankau, lending manager with Randolph Brooks Federal Credit Union, which has won the SBA Credit Union Lender of the Year award announced at the National Small Business Week held in Washington D.C., May 17, 2009, and received the same general answer: “Its not in our policy to lend money for flooring even with this new program.”
My question now is why Janice Mills, Senators and Representatives went through all the trouble of getting this passed, and the banking industry still will not help? As one banker stated “It’s still our money, regardless of what the government has to offer.”
I am sure I speak for all RV dealers, please, we urge you to force lending institutions to help as everyone else has. Please help us RV dealers and their employees in their struggle for survival. Also the ARC loans are also impossible to get. As of 10/01/2009, there have only been 11 approved applications for SBA floor plan guaranteed loans.
Please pass this on to your Congressman.
THIS IS AN URGENT PLEA!!!!!!!!!!!!!!!!!!
Ballard’s Freedom RV LLC
16719 Pawlin Drive
Selma, Texas 78154
The Recreation Vehicle Industry Association (RVIA) and Recreation Vehicle Dealers Association (RVDA) reacted positively today (May 28) to an announcement that the Small Business Administration (SBA) will offer government guaranteed loans for floorplan financing for eligible RV, auto and boat dealerships.
The good news came from SBA Administrator Karen Mills in Kokomo, Ind., who was accompanied by Ed Montgomery, President Obama’s director of recovery for auto communities and workers at a meeting involving local officials, small busnessmen, labor representatives and community leaders.
Dealer floorplan financing (DFP) will be available beginning July 1, according to Mills.
“We are very pleased with the SBA announcement today and believe that the improved availability of credit for RV dealers through this program will benefit the entire industry,” said RVIA President Richard Coon. “RVIA has worked diligently over the past several months to have the SBA include floorplan loans in 7(a) loan guarantee program.”
“This is good news for RV dealers,” said RVDA President Mike Molino. “Securing floorplan financing is vital for the health of the RV industry and the millions of customers who enjoy RV travel. We look forward to working with SBA and lenders to make this program a success.”
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.
In Kokomo, Mills said that countless small businesses, including dealerships, across the country are facing significant challenges as a result of the uncertainty in the auto industry. “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,” she said.
Mills and Montgomery discussed the new DFP pilot program, as well as other resources offered by SBA and the federal government to help small businesses in communities impacted by the troubles facing the auto industry.
“Small businesses are the engine of our economic growth,” Montgomery said. “We are committed to finding ways the federal government can cut through red tape and get resources to these companies quickly during these tough economic times.
“From supporting nearly $4 billion in lending to small businesses across the country since February to the dealer floorplan financing announced today,” he added, “the SBA is making the resources provided in the Recovery Act accessible and working to provided needed credit. The president is committed to continuing to work with federal officials to identify resources like these that make a real difference in the lives of our auto communities and workers.”
Under the DFP pilot program, the SBA will provide loan guarantees for lines of credit through its 7(a) program. DFP loans will be made through SBA lenders only for titled inventory, including autos, RVs, manufactured homes, boats and motorcycles.
The pilot program will be available through Sept. 30, 2010, at which time the SBA will make the determination of whether or not to extend the program.
DFP loans will be available for a minimum of $500,000 up to the $2 million allowable under the 7(a) program. With a maximum repayment term of five years, the loans will come with a 75% government guarantee. Borrowers will also benefit from the temporary elimination of fees on 7(a) loans made possible by the America’s Recovery and Reinvestment Act of 2009.
“We are committed to being the real partner small businesses need at this critical time,” Mills said. “Floorplan financing is just the latest tool in our toolbox to help small businesses in communities like Kokomo weather this recession and drive our nation’s economic recovery.”