MRAA wrote recently to the federal Small Business Administration in response to the agency's Notice and Request for Comments on its new pilot initiative to establish lines of credit for floor plan financing for recreational boat dealerships. MRAA is very concerned that the guidelines as written are geared more to the business model of auto dealerships and if the guidelines remain unchanged boat dealers will not qualify for the program.

MRAA has heard from hundreds of boat dealers expressing very serious concern about the financial difficulties of several banks and financial institutions, which are unable to meet the financial demands of our industry and have significantly changed lending policies. These new banking policies, in part, caused the SBA to establish its new pilot program to allow for floor plan financing.

However, several problems with the first draft of the SBA guidelines adversely impact the success of the program with regard to boat dealerships. MRAA asked the SBA to amend its guidelines to allow for application of the program in non-title and title states, to eliminate the $500,000 threshold for minimum loan amount, to increase the maximum loan amount to $4,000,000 from $2,000,000, to use SBA loan proceeds to refinance existing or new inventory at the existing lender or for the acquisition or refinance of inventory at a new lender, to expand the definition of franchise-only dealers since that business model does not apply to recreational boating, to allow banks to be considered experienced on a case-by-case basis, and to be less restrictive on the requirement that boat dealers have to provide monthly financial statements.

"We are asking the SBA to amend its guidelines with these recommendations, which will go a long way to ensure success of the program for boat dealers. We will continue to work the SBA to craft workable guidelines," said Ed Lofgren, MRAA Chairman.

The letter that MRAA sent to Grady Hedgespeth, Director, Office of Financial Assistance, U.S. Small Business Administration is available for download in PDF format.