WASHINGTON, D.C. – President Barrack Obama is now considering extending loans to dealers so that they might borrow money to acquire new and used boats, the Marine Retailers Association of America reported in a statement this week.
The Small Business Administration (SBA) is currently authorized by Congress to make 7(a) funds available for floor planning, but has had a long time moratorium on it, the association explained. Under the proposal to free up these funds, the SBA is proposing a pilot program of $1.6 billion. Current law limits 7 (a) loans to $2 million per business. That would be enough money for 8,000 floor plan loans at the maximum loan value, MRAA suggested.
The final financial terms of the proposal are still being discussed, but it is anticipated the SBA would require dealers to collateralize the loans with 10 percent of the loan for new boats and 20 percent for used boats, the association reported. Dealers may also have to pledge personal assets, but most of the financial terms are dependent on individual banking requirements.
During a two-day period preceding the American Boating Congress in Washington, D.C, MRAA President Phil Keeter 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, according to the association. The National Marine Manufacturers Association and the National Marine Bankers Association participated in the meeting with the SBA. Keeter had met earlier with the National Association of Guaranteed Government Loans, which administers the SBA 7 (a) loan program for floor plan financing.
The purpose of the meetings was to discuss the need for federal assistance for boat dealer floor planning, explained MRAA. The meeting with the SBA occurred immediately after a special meeting the SBA had in the White House to present the SBA plan for expansion of the 7 (a) loan program to floor planning at boat, car, and RV dealerships. The White House Office of Management and Budget is now considering the SBA proposal, MRAA reported.
It is anticipated OMB will review the SBA proposal and issue its decision as early as today, with an effective date projected between May 17 and June 1, according to the association.
MRAA, which said it strongly supports the opening of SBA 7 (a) loans to floor planning for boat dealers, is working with the National Automobile Dealers Association and the SBA to increase the loan amount to $5 million. This change would have to come through Congressional action, it explained.
To express your support for this proposal, MRAA suggests marine dealers go to www.whitehouse.gov and click on the “Contact Us” button, enter the required information and 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% 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.”
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