Business Plan for Auto Dealers, RV Dealers, Manufactured Homes

There is help available for used car dealerships, recreational vehicle dealerships and manufactured home dealerships. If only lenders cooperate.

Under a program to begin July 1, the U.S. Small Business Administration will offer a 75 percent government guarantee on loans dealers take to buy inventory.

Loans for $500,000 to $2 million are available under the "floor plan" financing program, a piece of the stimulus package. The program is aimed primarily at independent used-car dealers, whose financing has largely dried up. But some of the dealers worry that lenders won't take part in the program, even with the guarantee.

Dealers typically stay in business by borrowing against their inventory to buy more inventory, then repaying the debt as they sell the cars. The SBA program sets up a line of credit enabling dealers to borrow what they need; it also enables them to borrow against the line of credit again as they pay it down. Mark Brandt, owner of Brandt Auto Brokers, an independent retail and wholesale dealership in Marietta, said the Birmingham, Ala., bank that has been financing his inventory and that of other dealerships has pulled out of floor planning. Other banks, he said, have declined to fill the gap.

Banks may or many not participate in the program. The loans will actually come from SBA approved banks, not from the SBA itself. The SBA is simply the guarantor.

The best approach would be to combine as a group to encourage your local bank to offer this type of loan, emphasizing the guarantee program. Then present individual business plans for each business. Some businesses will warrant this type of financing, and some won't. The stronger your individual presentation, the more likely it is that your business can be one of the fortunate ones.