RV and car dealers, and auto industry suppliers can apply for federal loans to help pay for their showroom inventories, the Obama administration announced Friday. As a result of the change, more than 70,000 additional small businesses including auto and RV dealerships, auto industry suppliers and others could be eligible to apply.
The loans, which are backed by the Small Business Administration, will be available early next week, the agency said, and will be available through Sept. 30, 2010. Dealers must pay the manufacturers when they order a vehicle, not when it is sold.
With tightened credit, those loans have dried up. Until the rule changed was announced Friday, vehicle inventory financing -- called "floorplans" -- was not eligible for SBA loans. Parts suppliers also will be eligible for the loans, the SBA said. The loans will mean greater access to much-needed capital for businesses during the recession.
The temporary change to the 7(a) loan size standard is not unprecedented. SBA took similar actions in 1993, as a result of the recession of the early 1990s, and again in 2005 as part of a program aimed at helping small businesses in the wake of hurricanes Katrina and Rita.
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