ACTION ALERT
Dealers should contact President Obama about floor plan financing from SBA

The Federal Small Business Administration (SBA) is currently authorized by Congress to make 7(a) funds available to dealers for floor planning but has had a long time moratorium. At a May 5 meeting with the Office of Management and Budget (OMB) at the White House, SBA proposed that it use its 7(a) loan program for new and used floor plan financing.

Under the new proposal to free up these funds, the SBA is proposing a $1.6 billion pilot program. Current law limits  7(a) loans to $2 million per business. This is enough money for 8,000 floor plan loans at the maximum loan value. The final financial terms of the proposal are still being discussed, but it is anticipated that SBA would require dealers to collateralize the loans with 10 percent of the loan for new boats and 20 percent for used boats. Dealers may also have to pledge personal assets, but most of the financial terms depend on individual banking requirements.

The Marine Retailers Association of America (MRAA) strongly supports the opening of SBA 7(a) loans to floor planning for boat dealers. During a two-day period preceding the American Boating Congress in Washington, D.C, Phil Keeter, MRAA president, and Larry Innis, MRAA Washington representative, met with key employees of the National Automobile Dealers Association, the National Association of Development Companies, and the SBA. Representatives from NMMA and the National Marine Bankers Association also joined the meeting with SBA.  The purpose of the meetings was to discuss the need for federal assistance for boat dealer floor planning, and occurred immediately after SBA’s special meeting with OMB.

According to the SBA, the White House wants to make a decision by June 1 about making SBA funds available for dealer floor planning. Now is a critical time for dealers to get involved and show their support for SBA’s proposal.

It’s easy to do this. Dealers should go to www.whitehouse.gov and click on the “Contact Us” button, enter the required information, and submit the following message.

Dear Mr. President,
 “The recreational boating industry and my business are suffering from a credit freeze and the inability to obtain floor financing of our products causing as many of 50 percent of our valued employees to be laid off from work. We understand the Small Business Administration has presented a proposal to OMB which would open the SBA 7(a) loan program to floor plan financing for new and used boats.  Support of this proposal is critical for the financial recovery of our industry. We are writing to ask for your support of the SBA proposal to open the 7(a) loan program for floor plan financing.  

Thank you.”

It only takes a short time to type in this message, but the new proposal could have long lasting implications for the boat and motor industry.