The Small Business Administration today (May 1) increased the number of RV manufacturers, dealers and even campgrounds qualifying for loan guarantees.
However, dealer floorplans loans were not included at this point.
That,too, may change.
”The good news is that it allows more companies to be eligible under the loan program,” said Bill Baker, senior director of communications for the Recreation Vehicle Industry Association (RVIA).
Baker estimated that about 75% of RV dealers and 50% of RV manufacturers, many of which are small companies, will be able to qualify under the SBA 7(a) loan program. ”These are just rough estimates, he said.
At the same time, the Recreation Vehicle Dealers Association (RVDA) estimated that ”hundreds” of RV dealerships will become eligible for loan guarantees under the new alternative rule. ”It’s a great first step,” said Phil Ingrassia, RVDA vice president for communications.
Previously, companies had to have an average of less than $7 million in annual gross revenues over three years to qualify for up to $2 million in loans with 90% guaranteed under the SBA 7(a) loan program.
For those companies that don’t qualify under those provisions, the expanded rules require a firm to have a net worth of less than $8.5 million and after-tax income of less $3 million over the preceding two years.
The SBA estimated that in total, 70,000 additional small businesses will be eligible for loan guarantees under the program. Although all small businesses may qualify, particular attention has fallen on the auto and RV industry because of the extent to which they are being squeezed by tighter lending requirements at both the retail and wholesale levels.
While the new standards don’t address floorplan loan guarantees, ”We are still looking into the possibility,” SBA spokesman Mike Stamler told RVBusiness.
Trying to get the SBA to guarantee floorplans loans continues to be an RVIA priority. ”We are continuing to lobby as hard as we can in that respect,” said RVIA President Richard Coon.
President Barack Obama foreshadowed the SBA’s announcement during a speech Thursday after the bankruptcy of Chrysler LLC, the nation’s No. 3 domestic auto manufacturer.
RVIA and RVDA and state dealers associations have been lobbying the SBA to allow more companies in the RV sector to qualify for the loan program. The two groups also had pushed for companies with fewer than 500 employees to qualify, regardless of company income or net worth — a qualifier rejected by the SBA.
‘This is just on more step we are taking to make sure small businesses have access to capital to keep their doors open and employees working during these tough economic times,” SBA Administrator Karen Mills said in a press release.
”We have seen signs that small businesses that are just outside the traditional size standard are being shut out of the conventional lending market. This temporary change will help those business weather these tough times and help move our nation closer to economic recovery.”