Industries / Dealerships
Dealerships: inventory, floor plans and the curtailment squeeze.
Auto, trailer, boat, powersports and equipment dealers. How a floor plan reads next to the operating account, why dealers get stacked when curtailments and slow seasons collide, and the facilities that fit an inventory business.
What the read looks for
4 things an underwriter reads in this trade before the application.
The bank statements are read first in every trade. In this 1, these are the 4 patterns the read is looking for, and the 4 things to have explained before you send the file.
The floor plan next to the operating account
Flooring lines, curtailments and payoffs on sale show as large, regular debits tied to units. An underwriter reads them alongside the operating account to see whether the dealership funds its inventory or its inventory funds the dealership.
Turns
How many days a unit sits before it sells decides how much inventory financing the business can carry. Aged units on the lot are the first thing a lender asks about.
Customer deposits and lender fundings
Deposits arrive from customers, from the customers' lenders and from manufacturers, in different sizes and rhythms. Separating them is the first pass of the read, and a dealer who has already separated them gets read faster.
The real estate
A dealer that owns the lot or the building has the strongest collateral in the trade. A dealer that leases is underwritten on inventory, receivables and cash flow.
The common position stack
Curtailments arrive in the slow season.
How the stack usually builds in this trade, and the way out of it.
A trailer or boat dealer carries units through the winter, the floor plan curtailments come due before the spring buyers do, and a short advance covers them. A second advance covers the next month. The remittances then pull from the deposits the spring season brings in. The exit is a facility sized on the inventory and the business, retiring the positions at closing, and, where the dealer owns the property, real estate backed capital for the top of the range.
Facilities that fit
3 structures that match the trade.
Structures, not offers. Every facility is arranged through third party lenders and is subject to their underwriting and approval. Which 1 fits is decided by the file, not by the page.
Position buyout
Every advance retired in full at closing, 1 monthly payment, underwritten on inventory, receivables and business assets.
Read more FacilityInventory lines
A facility sized on the units on the lot and secured by them, so a larger buy does not drain cash.
Read more FacilityTerm loans and real estate backed capital
Fixed monthly payments sized on deposits, and, where the business owns its property, the only route to the top of the range.
Read moreQuestions from the trade
Answered straight.
Can a floor plan be refinanced or replaced?
Sometimes, depending on the manufacturer relationship and the units. More often the floor plan stays and the facility sits beside it, sized on the operating cash flow and any owned real estate. The floor plan agreement belongs in the file either way.
We are a family dealership with decades of history. Does that count?
It counts in the read of stability and in the relationship lenders will price. It does not replace the statements; a 65 year dealership and a 6 year 1 are both underwritten on the last 12 months of deposits.
We want to buy more inventory, not pay down debt. Is that a different conversation?
It is the same file with a different use of funds. An inventory line is sized on what you want to buy and what it costs, so tell us the purchase and the structure follows.
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Start with the file
A straight read within 2 business days.
Send the basics through the intake form: what the file supports, what is missing, and the next step if there is one. If we are not the right desk for it, we say so.