How to Present Your Portfolio to Receive the Most Floor Planning Dollars

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.

Get­ting Start­ed

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.

Income State­ments

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.

Bal­ance Sheet

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!

 

 

 

 

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