Dealers rely on floorplan financing to buy vehicles from the manufacturers. Nationally, the average floorplan loan for a dealer is $ 4.9 million, and dealers collectively hold approximately $100 billion in floorplanned inventory.

In New Hampshire, the average floor plan loan is $3.8 million, and dealers collectively hold over a half billion in floor planned inventory. 78 percent of NH dealers have an average balance of $4 million or less.

These floorplan loans are obtained from a variety of sources: captive finance companies, national banks, regional banks, credit unions, etc.

In order to extend this credit, the floorplan lenders need capital, and they obtain it from a variety of sources as well.

Sovereign Bank has given notice that it is withdrawing from the floor plan market.

Dealers are concerned that other lenders, including Citizens Bank, may withdraw from the market.  An estimated 23 percent of NH’s franchised dealers floorplan with Citizens.

Domestic dealers have been told by floorplan lenders that they will not even consider a floorplan application from domestic dealers.

Financially sound and profitable dealers have been given notice by their lenders that the floorplan line of credit is being withdrawn.

In an average market, it takes over 6 months to secure floorplan financing.  In the current market, the lenders are overwhelmed with applications.

Thousands of jobs will be lost if lenders continue to exit the floorplan market.

The lenders have experienced a liquidity crisis on a national and global level.

On the National level, the National Automobile Dealers Association (NADA) has been working with the Treasury Department to reopen the floorplan securitization market and thereby providing capital to the traditional floorplan lenders who will then have the resources they need to once again extend floorplan financing to dealers. This program is called TALF.

The initial release of TALF monies did not apply to floor plans and is not expected to significantly enhance the availability of credit for floorplan loans.  The NADA is attempting to modify the eligibility criteria in subsequent fundings of the TALF as soon as possible.

On a state level, New Hampshire needs to ensure that floorplan lenders stay in the floorplan market.

If lenders do exit the marketplace or withdraw individual lines of credit, New Hampshire needs to ensure that those lenders give the affected dealers an adequate amount of time to find a new line of credit.

New Hampshire needs to encourage state banks or credit unions to enter the floorplan marketplace especially to assist dealers with floorplan needs of less than $4 million.

New Hampshire should also consider alternatives to encourage other nontraditional lenders to enter the floorplan financing market.