With NextGear Capital Innovative Lending Products
NextGear Capital, the world’s most comprehensive and innovative provider of lending products for the automotive remarketing industry, is dedicated to making the process of buying and selling inventory faster, simpler and more profitable for our customers.
Whether you are just starting out, or looking to shift your business into the next gear, it is extremely likely that you will be able to find the capital you need to stock your dealership.
Floor Plan 101: The Basics
First and foremost, to qualify for a floor plan, you need to have established credit. Specifically, you should have a history of utilizing and repaying debt. Bad credit and ‘hiccups’ on your credit report aren’t always deal-breakers, but they will likely reduce the amount you qualify for.
Thinking about opening a dealership? You will want to setup a free consultation with the floor plan company of your choosing. Even if you are well capitalized, having a floor plan line of credit is an amazing asset that can help you seize opportunities as they arise.
Growing Your Business
If you are looking to grow your business through the addition of a floor plan line of credit, there are several other items that will play into the lending decision above and beyond your personal credit history. Trade references, business credit, equity, cash, and the overall health of your business all come into the picture.
Presenting Bank Statements
If you have had any NSF’s, those will need to be explained in detail. Also, you are going to want to make sure that your business checking exhibits positive cash flow, meaning that, in general, you have more money coming in than you have going out.
Personal Financial Statement
When it comes to your personal financial statement, ideally you should have some liquid assets. Cash, 401k, IRA, CD’s, bonds, etc. are all desirable elements to have in your portfolio given that they are accessible or you may be able to borrow against them if need be. This is ideal because it demonstrates that you have reserves in place to “weather the storm” should you encounter a few bad months or an unforeseen industry shift.
The income statement can be quite revealing, and often is used in part to determine what the true business need is when it comes to setting a floor plan credit limit. Additionally, this statement shines a spotlight on the overall sophistication of the operation. If you are generating additional revenues from F & I products and repairs for instance, that will all be itemized on this statement.
Simply put, the less you OWE, and the more you OWN, the lower the credit risk. Again, banks like to lend when the probability of repayment is the highest. Having too few assets and too much debt can become a downward spiral towards insolvency.
All of this ties into the overall viability of your operation. A thriving business should be building equity while reducing debt. A thriving dealer principal should be building net worth, not acquiring debt to keep their business above water.
With a broad offering of products and services, our industry-leading customer experience serves the needs of dealers and auctions alike. Let NextGear Capital help shift your business to the next gear!