The Recreation Vehicle Industry Association (RVIA) continues to work on all fronts in an effort to free up credit for RV dealers and consumers and help the industry recover from the current severe economic crisis.
Currently one focus of the association’s efforts is expanding the Small Business Administration’s (SBA) 7(a) lending program to benefit the RV industry, according to an RVIA release.
The SBA’s 7(a) loans are partially-guaranteed loans that are issued by a bank to a small businesses to support its operations. SBA recently raised guarantees for 7(a) loans from 75% to 90% and eliminated or cut borrower fees on these loans. While small businesses can currently secure up to $2 million under the 7(a) program for working capital, machinery and equipment, and in some cases debt financing, these monies cannot currently be used for dealer floorplan loans to purchase new inventory. Financing for floorplanning would provide much-needed working capital for RV dealers and would result in retention of thousands of jobs, RVIA contends.
At RVIA’s request, Sens. Ron Wyden, D-Ore., Evan Bayh , D-Ind., and Jeff Merkley, D-Ore., sent a joint letter to the SBA’s acting administrator asking for specific inclusions in the program that will help the RV industry. Sen. Richard Lugar, R-Ind., also sent a letter on the same topic to the SBA acting administrator.
The senators requested that RV dealer floor plan loans be included in SBA’s 7(a) guarantee program, saying, “The most helpful change in SBA policy would be to permit the financing of RV floorplan loans (for business inventory) as a temporary eligible activity through Dec. 11, 2011, in the 7(a) loan guarantee program.”
They also requested that the SBA temporarily adjust the standard for what it considers to be a “small” business. Currently the SBA considers small businesses to be companies with less than $7 million in gross earnings averaged over three years. The senators requested “that the SBA immediately change the small business definition for recreational vehicle dealers to allow increased RV dealership participation in the 7(a) loan program.” The senators also suggested SBA could change the definition of a small business to be one that employs 500 or fewer employees. Alternatively they suggested the SBA could “modify its definition to allow RV dealerships with up to $25 million in sales to participate, similar to the criteria for new car dealers.”
In arguing for the changes to the SBA program, the senators wrote, “During the Carter administration, automobile dealers sought and were granted an emergency rule through SBA that temporarily allowed dealers who sold fewer than 950 vehicles per year to qualify for SBA loans. The need for urgent action is as appropriate today as it was 30 years ago.”