The Small Business Administration dragged an old trick out of the Carter Administration closet: SBA guarantees to cover floor-plan financing at care dealerships and others who sell expensive products.
Under the financing program, the SBA will offer government-backed loans to finance inventories at the locations and keep workers employed. The plan is to let dealers borrow between $500,000 and $2 million against their inventory and repay the loan as they sell cars, the SBA said. The program is open to car dealerships and other sellers of “big ticket items,” Dow Jones Newswires reported.
The loans are a lifeline for small businesses that employ more than half the U.S. workforce, said SBA administrator Karen Mills in a prepared statement.
“Countless small businesses, including dealerships, across the country are facing significant challenges as a result of the uncertainty in the auto industry,” Mills said in a prepared statement. “Floor plan 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.”
The program runs July 1 to September 2010.
The Dow Jones News Service reports that “expanding SBA guarantees to cover floorplan financing has been done once – under a directive by President Jimmy Carter during a similar crisis facing auto dealers in 1980.”
(Karen G. Mills courtesy of U.S. Small Business Administration)