Senator Kay Hagan On SBA Decision To Expand Floor Plan Credit For Auto Dealers

May 29, 2009 -- WASHINGTON, D.C. - U.S. Senator Kay R. Hagan (D-NC) released the following statement today in response to the US Small Business Administration's announcement that it plans to make new lines of floor plan credit available to auto dealers beginning July 1. In April, Hagan joined 22 Senators from both sides of the aisle in sending a letter to President Obama urging him to expand the availability of credit for America's automobile dealers.

"I am pleased to hear the Small Business Administration will make expanded floor plan financing available to local auto dealers beginning July 1, Hagan said. "In North Carolina, automobile dealers are an important part of our economic engine. These expanded lines of credit will give them access to the funds they need to maintain their inventory and keep their doors open while also helping prevent future losses.

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"The currently-frozen credit markets threaten their very existence, which in turn threatens the job security and healthcare of thousands of workers and their families. In this economy, and in light of recent announcements by Chrysler and GM that they will close many of their dealerships, we need to be taking pragmatic steps to give auto dealers the tools they need to stay in business.

"With North Carolina's unemployment rate at 10.8 percent and more than 500,000 people out of work, we need to take appropriate measures to save and create jobs. These expanded lines of credit will help protect the jobs of the 32,000 North Carolinians employed by auto dealers and give North Carolina's auto dealers the shot in the arm they need to keep their cars on the lot so North Carolinians can actually purchase vehicles and put money back into the local economy. For North Carolina's auto dealers, the expansion of these loans couldn't come at a better time."

Automobile sales are a multi-billion dollar industry in North Carolina. An estimated 692 new-vehicle dealerships in the state post total annual sales of $20.5 billion. These dealerships employ more than 32,000 individuals in the state with a total annual payroll of $1.51 billion. Nationally, 1,000 dealerships shut their doors in the past year at a staggering cost of more than 50,000 jobs. General Motors announced this month they will shutter 1100 of their affiliated dealerships. Chrysler recently announced they will close 789 dealerships nationwide in the next two weeks.

"Expanded floor plan financing is the single-most important issue facing all auto dealers and is vital to helping North Carolina's auto dealers stay in business," said Bob Glaser, president of the North Carolina Automobile Dealers Association. "Recent announcements from Chrysler and GM that they will be closing thousands of dealerships nationwide, coupled with today's frozen credit markets have made this an extremely trying time for our auto dealers. The expansion of these lines of credit is critical to keeping cars on the lot and giving dealerships the help they need to make it through these rough economic times."

The new loans announced by the SBA on Thursday will provide loan guarantees for lines of credit to eligible auto, RV, manufactured home, boat and motorcycle dealers. The loans will be available for a minimum of $500,000 to a maximum of $2 million and a maximum repayment term of five years.

Borrowers of these lines of credit will also benefit from the temporary waiver of fees on 7(a) loans, made possible by the stimulus bill, for which Hagan voted.

Source: Senator Kay R. Hagan