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RVIA: SBA Program Providing Loan Refinancing

January 10, 2012 by · Leave a Comment 

The Recreation Vehicle Industry Association (RVIA) is advising the industry that loan refinancing programs remain available under the Small Business Jobs Act with the Small Business Administration (SBA) implementing a temporary program— effective until Sept. 27, 2012 —allowing small businesses to refinance eligible fixed assets in its 504 program without requirement of an expansion (usually required under this loan program).

This program provides small businesses the opportunity to lock in long-term, stable financing, and finance eligible business expenses as well as protect jobs and hire additional workers. Key program changes were made in April 2011 and with the issuance of a final rule, effective October 12, 2011. These changes are highlighted in bold type.

Key Program Features

• SBA launched this temporary program on Feb. 17, 2011, and began accepting loan applications on February 28, 2011. The program will end on Sept. 27, 2012.

• Beginning Oct. 12, 2011 borrowers can finance up to 90% of the appraised value of available collateral, which could include fixed assets acceptable to SBA (for example: commercial or residential real property). This allows borrowers with more than 10% equity to be able to obtain additional proceeds to pay for eligible business expenses.

• The Small Business Jobs Act authorized SBA to provide funding to small businesses for additional business expenses not originally part of the debt being refinanced. On Oct. 12, 2011, SBA revised the program to allow financing of eligible business expenses. Any expense directly related to business operations is eligible. Examples include: indebtedness to the business, salary, utilities, inventory, or insurance.

• In April 2011, SBA expanded the program parameters by allowing any business with a commercial mortgage that is two or more years old to refinance its debt, regardless of maturity.

• The program is structured like SBA’s traditional 504 loan program: borrowers will work with third-party lending institutions and SBA-approved Certified Development Companies (CDCs), typically private, non-profit organizations to obtain financing, in a traditional 10%/50%/40% split. However, the program no longer requires the third party lender to be 50% of the Project. The third party lender amount must be equal to or greater than the SBA amount. This allows the small business to maximize the amount of long-term, low interest, fixed rate financing available.

• SBA estimates that as many as 8,000 businesses may participate in this program during the current fiscal year, which will provide up to $7.5 billion in SBA-guaranteed financing leading to total project financing of almost $17 billion.

The program, which is completely separate from SBA’s traditional 504 program, is zero-subsidy, requiring no cost to the taxpayer: It will be funded entirely through additional fees assessed for refinancing projects.

Further information in the form of a Program Fact Sheet can be found at http://www.sba.gov/content/504-loan-refinancing-program or through a Frequently Asked Questions Page at http://www.sba.gov/content/faq-new-temporary-504-refinancing-program.

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SBA Extends Deadline on 504 Loan Program

March 30, 2011 by · Leave a Comment 

The U.S. Small Business Administration (SBA) is removing a deadline on a small business loan program, opening debt refinancing opportunities for thousands of additional companies across the U.S.

Small business owners with eligible commercial real estate mortgages maturing before or after Dec. 31, 2012, will be able to secure more stable, long-term financing through the SBA’s temporary 504 refinancing program, according to a news release from the Indiana Statewide Certified Development Corp. Previously, loan maturities and balloon payments must have come due by Dec. 31, 2012.

The earlier date excluded many small businesses from using the refinance program that was authorized by Congress and signed into law by President Obama as part of the 2010 Jobs Act. The change extending the deadline will be published in the Federal Register by April 6.

The refinancing program is temporary, but has the potential to assist thousands of American small businesses that need to refinance existing debt on real estate, buildings and equipment. The SBA is authorized to guarantee $7.5 billion in refinancing loans before Sept. 30 of this year. Another $7.5 billion is available to support loans applied for by Sept. 30, 2012.

Jean Wojtowicz, chairman of the National Association of Certified Development Corporation (NADCO), says, “The refinancing provision was made possible because of the strong case NADCO made that identified the amount of debt coming due in the near term that would likely have a difficult or impossible time finding a lender to step in. These are unprecedented times, with credit markets tight and only now beginning to loosen. We have saved countless businesses due to this provision that we fought so hard for.”

Wojtowicz also says, “We all know that the SBA 504 program creates great bang for the buck. It generates $94 for every $1 in program cost: $37 to the federal government and $57 in state and local revenues!”

Click here to view March 2011 funding rates for 10-year and 20-year debentures.

Congress created the SBA 504 program to help small businesses receive favorable financing terms and retain operating capital while expanding.

Wojtowicz says that the Indiana Statewide CDC has provided more than $408 million to 938 Indiana companies, creating 26,500 jobs, since 1983.

More information: www.cambridgecapitalmgmt.com, www.sba.gov and www.nadco.org

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SBA’s Pilot Loan Program Relaunch Underway

February 21, 2011 by · Leave a Comment 

Credit unions and other lenders looking to increase access to inventory financing for auto, boat, RV and other dealerships will be able to do so again through the relaunch of an SBA pilot loan program, the Credit Union Times reported.

The Small Business Jobs Act of 2010 included a provision for relaunching the SBA’s Dealer Floor Plan Pilot Loan program, which first became available in July 2009 and was made available again Feb. 8, according to the SBA. The pilot is part of the SBA’s overall 7(a) loan guarantee program. The Jobs Act also increased the maximum size for 7(a) loans to $5 million, up from $2 million, which includes loans made through the DFP pilot program.

“Dealerships are a cornerstone of local business communities,” said SBA Deputy Administrator Marie Johns. “As we continue to see our economy recover, the relaunch of this pilot provides another tool, alongside SBA’s other programs, to help them succeed and create jobs in their local communities.”

Floorplan financing is a revolving line of credit that allows a dealership to obtain financing through SBA’s 7(a) program for inventory that can be titled, such as autos, RVs, manufactured homes, boats and trailers. As each piece of collateral is sold by the dealer, the loan advance against that piece of collateral is repaid. As the loan is repaid, the dealer can borrow against the line of credit to add new inventory.

The program is available to qualifying small businesses, including new and used automobile, motorcycle, RV, manufactured homes and boat dealers. The SBA said it has issued a new maximum alternative size standard to allow businesses with $15 million net worth and $5 million in net income measured over two years to have access to the program.

The loan size can range from $500,000 to $5 million. The SBA said it will guarantee 75% on floorplan lines of credit when the lender advances no more than 100% of the invoiced cost for new inventory and 100% of the cost or industry based wholesale book value, whichever is less, for used inventory.

Loan proceeds may be used for the acquisition of titleable inventory for retail sales, to refinance existing floor plan lines of credit with another lender, or to refinance or replace existing floorplan lines of credit with the participating lender. Proceeds may also be used to pay the SBA guaranty fee.

All SBA-approved lenders including credit unions may make DFP loans, according to the agency. Lenders with more than $1 billion of floorplan lines of credit in their current portfolios may apply for delegated authority, which would expedite the lending process.

“As a result of the credit crunch in late 2008 and early 2009, dealerships saw a significant decline in the availability of this type of inventory financing,” Johns added.

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RVIA Applauds SBA Dealer Program Relaunch

February 11, 2011 by · Leave a Comment 

The Recreation Vehicle Industry Association (RVIA) applauds this week’s relaunch of the Small Business Administration’s (SBA) Dealer Floor Plan (DFP) Pilot Loan Program for the improvements the new effort includes to increase access to inventory financing for RV dealers.

“The relaunched program includes significant enhancements over the original program that RVIA and the RV industry pushed to have included — the new maximum loan size of $5 million, the ability for RV dealers with a higher net worth of up to $15 million to participate, and the extension of the program to three years,” RVIA President Richard Coon stated in a news release. “We are hopeful these changes will remove key barriers to lender participation, thereby attracting more lending sources and providing RV dealers with additional floorplan opportunities.”

The Small Business Jobs Act of 2010 included a provision for relaunching SBA’s Dealer Floor Plan (DFP) Pilot program, which first became available in July 2009. The pilot is part of the SBA’s overall 7(a) loan guaranty program. Key provisions of the relaunched program which RV dealers and lenders may use starting Wednesday (Feb. 9) include:

  • A loan amount between $500,000 and $5 million (previously limited to $2 million), for a term of not more than five years.
  • A new size standard allowing larger businesses to qualify as a small business under the new DFP, as follows: the maximum tangible net worth of the business cannot exceed $15 million; and, the average net income after federal taxes (excluding carry-over losses) for the two full fiscal years prior to the date of the application for DFP is not more than $5 million.
  • An advance rate of up to 100%of the value of the goods to be purchased may be offered by lenders.
  • An SBA guaranty of 75% on floorplan lines of credit. In the original DFP, the guaranty for RVs, boats and manufactured homes had been 60%, while autos had the 75% rate. Now, all have the 75% guaranty.
  • In addition to the acquisition of titleable inventory for retail sales, loan proceeds can now also be used to refinance existing floorplan lines of credit with another lender or to refinance/replace existing floorplan lines of credit with the same lender.
  • An extension of the DFP program to Sept. 30, 2013 (was Sept. 30, 2010).
  • A floorplan lender with at least $1 billion in floorplan lines of credit in its current portfolio may qualify for delegated authority under the new DFP Pilot, which will expedite the loan approval process for small business owners and allows more autonomy for lenders. Delegated floorplan lenders can use SBA Express forms and utilize their own policies, procedures, internal controls and documentation.
  • “Eligible retail goods” that can be purchased under the new DFP are still automobiles, recreational vehicles, boats, and manufactured homes which can be titled under state law.

“This is the second generation of the SBA DFP Pilot Program,” said Dianne Farrell, RVIA’s vice president of government affairs. “In speaking with SBA staff, they are confident that the enhancements better meet the needs of the banking community and will lead to more floorplan financing options being available to dealerships, which are the cornerstone of many local business communities.”

A coalition of trade associations, including RVIA, the Recreation Vehicle Dealers Association (RVDA), marine, auto, trailer and manufactured housing dealers and manufacturers worked to ensure the new DFP program contained these improvements.

The rules and regulations for the pilot are now available on the website of The Federal Register, and in print editions. A procedural guide to the program will be posted on the SBA website at: http://www.sba.gov/content/dealer-floor-plan-financing-program-0.

Borrowers interested in obtaining a DFP loan should contact their lender or their nearest SBA field office to get a list of SBA-approved lenders in their area who may be participating in the program. Local district offices and contact information, as well as information on this and other SBA programs and resources, can be found at www.sba.gov or by calling the SBA Answer Desk at (800) U-ASK-SBA or TDD (704) 344-6640.

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RVDA Praises SBA on Upping Floorplan Regs

February 4, 2011 by · 2 Comments 

The Recreation Vehicle Dealers Association (RVDA) praised the Small Business Administration (SBA) for reviving its pilot loan program aimed at increasing access to inventory financing for RV and other vehicle dealers.

The rules and regulations for the pilot will be available Monday (Feb. 8) on the SBA’s website and through links from the RVDA Lenders Toolbox at www.rvda.org. Dealers can start submitting loan applications for the federally backed loans on Tuesday.

“We are pleased that SBA is moving forward with the program and that the maximum size for floorplan loans is now $5 million,” said RVDA President Mike Molino. “RVDA worked with the agency on a number of ideas to improve the program. We look forward to reviewing the new rules and providing useful information to members interested in exploring SBA loans.”

SBA said that borrowers interested in obtaining a DFP loan should contact their lender or their nearest SBA field office to get a list of SBA-approved lenders in their area who may be participating in the program. Local district offices and contact information, as well as information on this and other SBA programs and resources, can be found at www.sba.gov or by calling the SBA Answer Desk at (800) U-ASK-SBA.

The Small Business Jobs Act of 2010 included a provision for continuing the Dealer Floor Plan (DFP) Pilot Loan program, which is part of the SBA’s overall 7(a) loan guarantee program. The Jobs Act also increased the maximum size for 7(a) loans to $5 million, up from $2 million.

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SBA Relaunches Floorplan Pilot Program

February 4, 2011 by · 1 Comment 

A pilot loan program aimed at increasing access to inventory financing for auto, boat, RV and other dealerships will be re-launched Wednesday (Feb. 9 and will be effective through Sept. 30, 2013, the U.S. Small Business Administration announced today (Feb. 4).

The Small Business Jobs Act of 2010 included a provision for re-launching SBA’s Dealer Floor Plan (DFP) Pilot Loan program, which first became available in July 2009. The pilot is part of the SBA’s overall 7(a) loan guarantee program. The Jobs Act also increased the maximum size for 7(a) loans to $5 million, up from $2 million, which includes loans made through the DFP pilot program.

“As a result of the credit crunch in late 2008 and early 2009, dealerships saw a significant decline in the availability of this type of inventory financing,” SBA Deputy Administrator Marie Johns said. “SBA’s original DFP pilot program was launched as a way to expand the availability of floor plan financing and the Jobs Act added further enhancements to that program, including allowing for larger loan sizes.

“Dealerships are a cornerstone of local business communities,” Johns continued. “As we continue to see our economy recover, the re-launch of this pilot provides another tool, alongside SBA’s other programs, to help them succeed and create jobs in their local communities.”

The rules and regulations for the pilot will be available Tuesday on the website of The Federal Register, and in print editions on Wednesday. A procedural guide to the program will be posted on the SBA website at: http://www.sba.gov/content/dealer-floor-plan-financing-program-0.

Floorplan financing is a revolving line of credit that allows a dealership to obtain financing through SBA’s 7(a) program for inventory that can be titled, such as autos, RVs, manufactured homes, boats and trailers. As each piece of collateral is sold by the dealer, the loan advance against that piece of collateral is repaid. As the loan is repaid, the dealer can borrow against the line of credit to add new inventory.

The program is available to qualifying small businesses, including new and used automobile, motorcycle, RV, manufactured homes and boat dealers. SBA has issued a new maximum alternative size standard to allow businesses with $15 million net worth and $5 million in net income measured over two years to have access to the program.

All SBA-approved lenders may make DFP loans. Lenders with more than $1 billion of floor plan lines of credit in their current portfolios may apply for delegated authority, which would expedite the lending process.

Borrowers interested in obtaining a DFP loan should contact their lender or their nearest SBA field office to get a list of SBA-approved lenders in their area who may be participating in the program. Local district offices and contact information, as well as information on this and other SBA programs and resources, can be found at www.sba.gov or by calling the SBA Answer Desk at (800) U-ASK-SBA or TDD (704) 344-6640.

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SBA Hikes RV Dealer Size Standard to $30M

October 19, 2010 by · Leave a Comment 

SBA Administrator Karen Mills

SBA Administrator Karen Mills

The Small Business Administration (SBA) announced this month that the agency has permanently increased its RV dealer size standard to $30 million in annual revenue. Previously, only RV dealers with annual revenue under $7 million qualified for SBA programs, according to a news release.

The Recreation Vehicle Dealers Association (RVDA) worked with the Recreation Vehicle Industry Association (RVIA) and other trade groups to secure a temporary increase in the SBA size standards to $30 million in revenues during the recession. RVDA staff discussed size standards several times with SBA staff, including a joint industry meeting with SBA Administrator Karen Mills. RVDA was able to explain the industry’s need for the larger annual revenue classification due to the high cost of RV dealer inventories.

RV dealer SBA size standards primarily apply to SBA loan and other financing programs. SBA recently broadened and enhanced its 7(a) Business Loan Guarantee Program making its financing terms more favorable for small businesses, including RV dealers.

As part of that effort, SBA extended its 7(a) Business Loan Guarantee Program to Dealer Floor Plan Financing. This will enable more than 90% of RV dealers to participate in SBA’s financing programs as that program is reconfigured to be more effective and useful for banks and dealers. For questions or more information on the change in size standards, or the SBA Dealer Floor Plan Financing program, visit the RVDA Lenders Toolbox at www.rvda.org or send an e-mail info@rvda.org.

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Rep. Donnelly: New Law Will Aid RV Industry

October 1, 2010 by · Leave a Comment 

U.S. Rep. Joe Donnelly (left) with RV dealer Hanck Schrock, ??? and BJ Thompson.

U.S. Rep. Joe Donnelly (left) with RV dealer Hank Schrock of Total Value RV, Dan Jones and RVIA's BJ Thompson.

U.S. Rep. Joe Donnelly, D-Ind., is hopeful the newly signed Small Business Jobs and Credit Act of 2010 will spur RV dealer wholesale floorplan lending through the Small Business Administration (SBA), even though the previous SBA approach fell short of expectations for many in the industry.

Donnelly was a key supporter of the act, which encompassed many of the suggestions he garnered from RV dealers, manufacturers and lenders at a forum he sponsored Feb. 5 in Elkhart, Ind. The new law extends the SBA’s Dealer Floor Plan Program, which Donnelly first called for through bipartisan legislation he introduced in July 2010.

Donnelly held a news conference today (Oct. 1) at Total Value RV on the north side of Elkhart to comment on the new law, which had bipartisan support.

The new law increases the limits on SBA guaranteed 7(a) loans from $2 million to as much as $5 million and for manufacturers in the 504 loan program, loans are increased up to $5.5 million.

“In effect what we saw passed was written and put together by the folks in Elkhart, from the RV and marine industries,” Donnelly told RVBUSINESS.com following his news conference. “It was dealers, manufacturers and the lenders saying, ‘Here’s what we need.’”

Donnelly said that lenders had told him that they were not interested in the original SBA program because of its Sept. 30 expiration date. The new law extends it for three years, which should now make it attractive, he said, and will make it easier for banks to track dealer inventory and reduce recordkeeping costs. He anticipates that more large banks, as well as smaller community banks, will now step forward to participate in the SBA program.

“I’m very happy that some of these fresh ideas have now become law and our government will work better for these businesses so important to growing the Hoosier economy,” Donnelly said at the conference

The new law, however, does not raise the SBA guarantee in floorplan loans from the current 75% to 90%, as had been requested by lenders at the Feb. 5 conference.

“We tried to get done, but there was not a willingness (by Congress) to increase it any higher,” he told RVBUSINESS.com.

“This bill provides an important option to RV dealers that will help make the wholesale purchase of RVs easier,” said BJ Thompson, president of BJ Thompson Associates and a board member and long-time Public Relations Committee Chairman for the Recreation Vehicle Industry Association (RVIA).

“Anytime we can remove hurdles and help fulfill the demand for RVs, that’s good for the economy,” said Thompson in the press release. “And by supporting this bill, Congressman Donnelly has again stepped up and continued to be a friend of the RV industry.“

The SBA’s Dealer Floor Plan (DFP) Financing Pilot Program was created in July 2009 to provide loan guarantees through SBA lenders for titleable assets such as autos, RVs, boats, and trailers through the SBA’s 7(a) loan program.

But the program fell short of its goal, and less than 50 auto dealers and just two RV dealers had taken part as of February.

Based on the feedback Donnelly received from dealers and lenders, he and Rep. Fred Upton, R-Mich., introduced H.R. 5734, The Dealer Floor Plan Program Extension and Improvement Act, in July that would extend the DFP program for five years.

Donnelly had written to congressional leaders strongly urging them to do more to help meet the needs of small business owners by expanding the lending limits to $5 million.

The new law additionally invests in current and future small business owners by providing grants to Small Business Development Centers. Dan Jones, president of the Business Development Corp., joined Donnelly at Total RV today to talk about the increased opportunities for small businesses.

“Many more companies are now eligible for SBA 504 loans,” said Jones. “The size of small businesses that qualify was increased. Those businesses having a tangible net worth of $15 million and 2-year average net income after federal income tax of $5 million are now eligible.

“Of special importance to small businesses that are struggling with existing high-interest loans or up-coming loan balloon payoffs, the SBA 504 loan program can now be used to refinance existing debt at lower rates for longer terms. There was also $505 million included in the legislation to continue fee relief on SBA 504 loans through the end of 2010. This fee waiver was first enacted in February 2009 as part of the American Recovery and Reinvestment Recovery Act (ARRA), and the new funds will allow borrowers who applied for SBA 504 loans under the ARRA program to save thousands of dollars in loan fees.”

“Access to credit is one of the most critical issues for small businesses right now,” said Donnelly. “With increased loan limits and increased training funding for current and future small business owners, we’re giving Hoosier small business owners the tools they need to succeed.”

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Act Extends SBA Programs, Tax Provisions

September 24, 2010 by · Leave a Comment 

The U.S. House of Representatives passed the Small Business Jobs Act Thursday (Sept. 23) by a vote of 237-187, the Recreation Vehicle Dealer Association (RVDA) announced in a news release.

The bill increases the loan limits on Small Business Administration (SBA) guaranteed 7(a) loans from $2 million to as much as $5 million. This impacts the SBA’s year-old dealer floorplan program (DFP), which has struggled to attract participation from lenders. The bill has now cleared both the House and Senate, and President Obama is expected to sign the bill in a few days.

Earlier this year, RVDA and its allies submitted comments aimed at improving the SBA’s dealer floor plan program, which was set to expire after one year at the end of September. Some of RVDA’s comments are reflected in the final bill, including a three-year extension of the floorplan program and the higher loan limits. Other provisions of the bill include the creation of a $30 billion fund that provides capital to small community banks to prompt small business lending, and $12 billion in tax breaks for businesses.

Other important provisions of the bill include:

  • $1.5 billion to support existing state small business credit initiatives.
  • Small businesses would be able to immediately expense up to $250,000 in capital spending. The bill also extends tax provisions that allow all businesses to more quickly write off purchases of new equipment and other depreciable property.
  • To encourage investments in small businesses, the bill would exclude some small business stock sales from capital gains taxes.
  • Small business deductibles for start-up costs would be doubled to $10,000.
  • The bill frees up capital by allowing small businesses to carry back general business tax credits to offset taxes paid over the previous five years, instead of the current one year carry back. Anything left over can be carried forward for 20 years.
  • The bill’s cost is to be offset by revenue-raising provisions aimed at clarifying and tightening tax rules, including tightening eligibility for a tax credit on corrosive biofuels such as crude tall oil, a by-product of paper manufacturing.

Click here for more information on SBA Loan Programs in RVDA’s Lenders Toolbox.

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RV Industry Hears About Latest SBA Lending Plan

February 5, 2010 by · 1 Comment 

U.S. Rep. Joe Donnelly, D-Ind., (right) with Marianne Markowitz and Eric Zarnikow of the Small Business Administration.

U.S. Rep. Joe Donnelly, D-Ind., (right) with Marianne Markowitz and Eric Zarnikow of the Small Business Administration.

Rob Reid, owner of Great Lakes RV, thought he sold five RVs this week off his sales lot in Elkhart, Ind. But when his customers went to their local bank for a loan, all five got rejected, despite credit scores in the 700-range.

It’s a story that occurs daily across the country and has crippled the RV industry nationwide since autumn of 2008. Credit at all levels of the industry, from manufacturers and dealers to finance their businesses to consumers to buy their products, has dried up.

Freeing up frozen credit markets and helping small businesses get the capital they need to survive, especially for RV dealers like Reid, was the focus of a Dealer Floor Plan Financing Conference today (Feb. 5) in Elkhart, organized by U.S. Rep. Joe Donnelly, D-Ind., whose district includes Elkhart County.

The Hoosier Democrat invited several dozen RV manufacturers and dealers and Midwestern lenders to interface with officials from the Small Business Administration (SBA) to “crack the nut” and help thaw frozen credit. The audience of some 50 key leaders also got a sneak peek at highlights of a plan that was announced later in the day by President Obama in a speech in Maryland.

However, the disconnect between the U.S. lending community and the RV industry quickly surfaced during the conference in Elkhart. And based on random comments from participants during and after the conference, the freeze may continue, even after the SBA revealed proposals designed to make SBA loans more attractive to lenders and owners of small businesses.

Obama announced two new small business lending initiatives and continued to ask Congress to permanently increase maximum loan sizes for the SBA lending programs.

The two temporary SBA initiatives include a refinancing program for small business owner-occupied commercial real estate and an expanded working capital loan program.

The president also said the SBA 7(a), 504 and micro loan programs should have higher loan ceilings to help small businesses and shield commercial lenders from more risk. He also recommended extension of the successful small business Recovery Act lending programs.

Obama proposes to raise the loan limit on the SBA’s 7(a) program from $2 million to $5 million and to raise the limits on SBA’s Express program from $350,000 to $1 million.

The Obama administration is requesting $7.5 billion in new 504-loan authority for Fiscal Years 2011 and 2012.and FY12.

This requested financing authority is separate from that of the regular 504 program, for which the administration has already requested $7.5 billion in its FY 2011 budget submission to Congress.

If Congress approves both requests, the total lending authority by 504 for regular loans and refinanced debt would be $15 billion annually.

The two-hour-long conference in Elkhart drew CEOs from some of the leading Midwestern RV companies, including Coachmen RV, Gulf Stream Coach Inc., Damon Motor Coach and Monaco RV LLC.

Lenders included GE Capital, KeyBank, Wells Fargo Bank and several smaller regional banks.

Eric Zarnikow, the associate administrator for SBA’s Capital Access program, was the lead SBA presenter.

Donnelly lobbied last year to make SBA lending more attractive to RV dealers by convincing Congress to include RV dealers in a bill designed to help the beleaguered auto industry. But for all his efforts, the new SBA program has attracted a mere 48 borrowers in 22 states who borrowed a total of $53 million. Just two of the 48 are RV dealers. And the program is set to expire the end of September.

The RV industry has expressed its appreciation to Donnelly for his efforts, but the initial results have been disappointing. The Hoosier congressman said he organized Friday’s conference to explore ways to make the program more appealing to lenders and the RV industry.

The problem, as lenders expressed during a lively give-and-take with the SBA representatives, is that compliance with the SBA requirements creates way too much overhead for most small, regional lenders, thereby making the loans, even with the SBA guarantee, unattractive.

Even raising the portion that SBA will guarantee, from 75% to 90% of the loan, as the SBA is suggesting, doesn’t seem sufficiently beneficial to many banks, said Joseph Burr, a vice president with Wells Fargo Bank, who came down from his office in Milwaukee, Wis., for the event.

Other lenders in the audience, such as from Lake City Bank in Warsaw, Ind., implied the higher loan guarantees could make the program more attractive. But when one of the Lake City bankers asked if the SBA would ever guarantee 100% of the loan, Zarnikow said that would not happen.

Bill Burton from South Bend-based 1st Source Bank, the largest locally based bank in Northern Indiana, said most small banks are not set up to make dealer floorplanning loans. He also said many banks fear the SBA guarantee being “compromised,” and another speaker said some banks don’t know for sure they have a guarantee until or unless the loan goes into liquidation.

Indeed, the SBA averages paying back about 95% of what it says it will guarantee when borrowers do default on their SBA loans, Zarnikow conceded. But the SBA has improved on its speed in which it makes such reimbursements, from 270 days just a few years ago to about 45 days now, he noted.

At one point, Bill Fenech, CEO of Damon Motor Coach, engaged in a lively exchange with Burr, implying that banks don’t want to lend money.

And Coachmen’s Mike Terlep came to the defense of small banks at one point, saying that making dealer floorplanning loans may not be in their core competencies.

Claude Donati of Gulf Stream Coach said his extensive phone survey of some 30 banks last year showed they were not interested in the SBA program, for many of the reasons cited by the lenders during Friday’s conference. He fears they will hold to their beliefs, even with the more attractive guarantees.

Peter K. Lannon of GE Capital Solutions reported that GE has resumed lending to the RV industry and that new loans on the books exceed $200 million. He said the SBA proposal to reduce banks’ risk in making the dealer floorplanning loans will help solve the problem.

Donnelly thanked the participants, saying he is armed with new insights to take back to Washington as the federal government continues to search for ways to help the economy.

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