NAMAD's Sheila Vaden-Williams: "These businesses are so capital-intensive."
Dealers must belong to the National Association of Minority Automobile Dealers, or NAMAD, to qualify. David Stevens, executive vice president of Wachovia Dealer Financial Services, says he expects typical loans to range from $10 million to $15 million.
Dealers may borrow for floorplanning, real estate acquisitions, expansion projects and buyouts of factory interests in dealerships, Stevens adds.
Wachovia, a bank holding company in Charlotte, N.C., already has agreed to lend $75 million to seven minority dealers. Two other loans are pending, Stevens says.
NAMAD President Sheila Vaden-Williams says many minority dealers cannot get financing from sources other than automakers' dealer development programs.
"These businesses are so capital-intensive," Williams says. "Without economic choice and economic freedom, we're never going to be able to leverage our relationship to get the best terms."
Wachovia is making loans to dealers in the 15 eastern and southeastern states in which it does business. Vaden-Williams says 60 percent of NAMAD's roughly 700 members operate in those states.
The Florida Minority Community Reinvestment Coalition, a business development group, brought NAMAD and Wachovia together. Al Pina, the coalition's chairman, says that auto retailers dominate lists of the nation's largest minority-owned businesses.
Pina says his coalition began talking with Wachovia last year about lending to minority dealers. NAMAD joined the project in January, he adds.
Stevens says the minority lending program will not charge special interest rates. Wachovia will evaluate each loan applicant individually, he says.
"We don't put every deal in a cookie cutter," Stevens says. "I have a passion to make this work."
Wachovia and NAMAD will help participating dealerships with succession planning and other financial matters. NAMAD will help screen and process applicants.
Wachovia will give advice to dealers who do not qualify for the program to make them more creditworthy, Vaden-Williams says.
In 2003, NAMAD called on automakers to award at least 15 percent of their dealerships to minorities. Virtually every automaker has adopted that goal, at least in principle, Vaden-Williams says.
But minority dealers need more sources of financing to advance that goal, she adds.
Vaden-Williams says of the Wachovia program: "This partnership has the potential to revolutionize the industry as it relates to minority dealers."