ACTION ALERT UPDATE

Good news on the Ethanol and SBA fronts
By Jerome Koncel

In the May 6 and May 13 e-newsletters, we published Action Alerts on an attempt to increase the percentage of ethanol in gasoline and efforts to push the Federal Small Business Administration (SBA) to increase their floor plan loans to boat and motor dealers. We asked boat and motor dealers to get involved and send letters to the EPA and President Obama respectively on the two different matters.

In this issue, we are happy to report that there’s good news on both fronts, albeit in different ways.

SBA loans
In a move unrelated to increased floorplan financing from SBA, Karen G. Mills, SBA administrator, announced on May 19 that small businesses suffering financial hardship as a result of the slow economy may be eligible to receive temporary relief. She announced a new loan program to keep dealers’ doors open and get their cash flow back on track.

Beginning on June 15, SBA will start guaranteeing America’s Recovery Capital (ARC) loans, which are deferred payment loans for up to $35,000 offered to established, viable, for-profit small businesses that need short-term help to make their principal and interest payments on existing qualifying debt.

For small boat and motor dealers, it is important to note that ARC loans are:
            • interest-free to the borrower
            • guaranteed 100 percent by SBA
            • have no SBA fees associated with them.

Mills said ARC loans are designed to free up capital and put it in the hands of owners when they need it the most. “This will help viable small businesses continue to grow and thrive and create new jobs in communities across the country,” said Mills. Phil Keeter, president of the Marine Retailers Association of America (MRAA), added that this is very positive news for many boat and motor dealers.

Commercial lenders, not SBA, will make ARC loans directly. They will provide funds for:
            • payments for principal and interest
            • qualifying small business debt, including mortgages
            • term and revolving lines of credit
            • capital leases
            • notes payable to vendors, suppliers, and utilities.

Borrowers don’t have to pay interest on ARC loans. Repayment will not begin until 12 months after the final disbursement. After the 12-month deferral period, borrowers will have five years within which to pay back the loan principal. For more information on ARC loans, visit www.sba.com.

Ethanol decision delayed
On the ethanol front, EPA announced on Friday, May 15, a 60-day extension to the original comment period on a petition submitted by Growth Energy, a pro-ethanol lobby.  The group wants EPA to issue a waiver allowing producers to manufacture gasoline blends with up to 15 percent ethanol. The original comment period was to end on May 21, 2009, but is now extended to July 20, 2009.

The extension of the comment period allows boaters, dealers, marine industry manufacturers, employees, and other interested parties to submit comments to EPA if they have not already done so.

On May 19, the Environmental Working Group, a nonprofit research organization that has the support of the National Marine Manufacturer’s Association, MRAA, and other marine associations, delivered a letter and white paper to EPA Administrator Lisa Jackson that included a detailed review of the scientific research cited in Growth Energy’s waiver petition. The letter analyzed the seven studies cited by Growth Energy and showed that they did not fully support the case for introducing mid-level ethanol blends. 

NMMA continues to call for a science-based review of the ethanol request to ensure that increased levels of ethanol in gasoline would not harm boats, marine engines, and other affected equipment. The organization said that more than 25,000 comments have been sent to EPA opposing the waiver petition through its online advocacy tool: http://capwiz.com/nmma/home. 

In the white paper entitled, “Ongoing Studies of E15 and E20 Ethanol Blends Indicate Risks to Human Health, as well as Safety and Performance of Motor Vehicles and Non-Road Engines,” there is evidence presented that the increased use of E15 and E20 ethanol gasoline blends would cause damage and failure to marine equipment. Moreover, the blends could also result in the addition of harmful emissions.