Federal Reserve Helps New-Car Dealers
The Federal Reserve said yesterday that floorplan loans for new-car dealers will be included in a $200 billion program designed to stimulate small-business and consumer lending.
The Term Asset-Backed Securities Loan Facility, or TALF, was created on November 25th in order to help small businesses and consumers get credit. The loans will be available until December 31, 2009. Until yesterday’s announcement, it was unclear whether lenders could use the loans to finance new-car inventories for dealers.
TALF money will help dealers with problems obtaining floorplan financing due to the current credit crisis that has crippled the U.S. economy in the second half of the year. The loan terms can range from one to three years.
The announcement brings added relief to the automotive industry as a whole. Less than a week ago, the Bush administration offered $17 billion in loans to GM and Chrysler, who both said they needed financing to survive through next March. Those loans will begin arriving this month.
Source: Automotive News