The previous floorplan financing limit in the U.S. Small Business Administration pilot program was $2 million. The 17-month-old program hasn't gotten off the ground because banks, credit unions and other lenders have been reluctant to participate.
The new law will keep the portion of each loan that is backed by the federal government at 75 percent.
It also waives lender fees to the government of as much as $54,000 on a $2 million loan, SBA spokesman Michael Stamler said. These fees can be passed on to dealers.
Only 61 SBA-backed floorplan loans totaling $61 million have been approved for dealerships, Stamler said.
Lenders have cited government red tape and fees, their own staffing constraints and lack of familiarity with floorplan financing.
The SBA program, which began in May 2009, will expire in September 2013 under the new law.
The Obama-backed legislation, which contains provisions aimed at creating jobs as well as easing credit, passed the House and Senate over almost completely unified Republican opposition as the Nov. 2 congressional elections approach.
Said Sen. Debbie Stabenow, D-Mich.: “This new law increases access to capital for small businesses, cuts taxes, and helps promote exports and entrepreneurship.”