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New SBA program targets auto financing

Feb 07, 2011 Brian Bradley

The U.S. Small Business Administration is entering the auto financing industry through a pilot program that aims to improve auto financing inventory. According to a release from the administration, the pilot program will begin on February 9 and run through September 30, 2013. The financing plans are part of the reintroduction of the Dealer Floor Plan Pilot Loan Program, which is a provision of the Small Business Jobs Act of 2010. The DFP is part of the SBA 7(a) loan guarantee program, which increased guaranteed loans to small businesses from $2 million to $5 million. That lending also left room for auto industry financing. "SBA's original DFP pilot program was launched as a way to expand the availability of floor plan financing and the Jobs Act added further enhancements to that program, including allowing for larger loan sizes," SBA Deputy Administrator Marie Johns said in a statement. Eligible small businesses will include auto dealers that feature new and used inventories, and have $5 million in net income and $15 million in net worth over a two-year period. Lenders with more than $1 billion in floor plan credit may qualify for a quicker lending process.