The latest public subsidy to cars-first transportation:
A pilot loan program aimed at increasing access to inventory financing for auto, boat, RV and other dealerships will be re-launched Wednesday (2/9) and will be effective through Sept. 30, 2013, the U.S. Small Business Administration announced today.
Floor plan 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.
The maximum interest rate on these loans? Prime plus 2.25 percent, or about 5.5% total. Compare that with your credit card terms, ye nation of faithful “consumers.”
The whole thing, of course, is being justified by “jobs”:
“Dealerships are a cornerstone of local business communities,” SBA Deputy Administrator Marie 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.”
Can’t you just see it? As the nation’s overstuffed colleges and for-profit trade schools begin to churn out the coming flood of new graduates, each and every one will find a glorious career on the showroom floor! All hail capitalism!