The government-guaranteed loans will be available to dealers to finance their auto and other inventories, known in the industry as a floor plan.

Through SBA lenders, the dealer floor-plan financing will provide lines of credit through the 7(a) program for titled inventory, including cars, RVs, boats and motorcycles. Dealers can borrow $500,000 to $2 million against their inventory and repay the debt as they sell vehicles.

The loans have a maximum repayment term of five years and will have a 75 percent government guarantee. As part of the American Recovery and Reinvestment Act, fees also are being eliminated temporarily on 7(a) loans.

“Countless small businesses, including dealerships, across the country are facing significant challenges as a result of the uncertainty in the auto industry,” says SBA Administrator Karen Mills. “Floor-plan financing can offer some dealerships the opportunity to get through these tough economic times by allowing them to keep their inventory and cash flow intact, as well as save the jobs these small businesses provide.”

Amid the economic turmoil and low auto sales, car dealers throughout the country have run into problems keeping their floor plans through banks and auto manufacturers. Most need them to be able to finance and stock inventory.

The program will run until September 2010, when the SBA will decide whether to extend it.

Source -  http://www.bizjournals.com/nashville/stories/2009/06/01/daily6.html