Cash flow is the lifeblood of any business and for automotive dealers, a floorplan loan is key to getting needed funds to buy inventory. However, there are a few key items dealers need in place before gaining access to a line of credit.
Established Credit History
Any lender will want to have information about an individual’s borrowing history before approving a line of credit. Lending any amount of funds can be a risk to the lender, and an established credit history can help ensure the likelihood of being paid back.
Each state has different requirements to become an auto dealer. Before applying for a line of credit, make sure that your dealer license is up-to-date and current. Most lenders and floor plan providers prefer to see an active dealer’s license with the correct dealership name to make sure it is legal for that entity to buy and sell cars.
Completed Credit Application
A lender’s credit application will most likely have a few basic questions geared towards getting your dealership’s basic information. Form fields like the dealership name, address, contact information are pretty standard. Lenders will also frequently ask for additional information on how your entity is structured, whether it’s a partnership, S-corp or LLC, and the amount of credit you’re looking to acquire.
Combined with credit history, these details will help lenders determine the line of credit amount they are able to offer.
Extra financial documents may need to be submitted, especially if you’re asking for a large loan amount for your dealership. Some of these documents can include balance sheets, income statements, maybe even a few years of tax returns.
Though it make take some time to get some of these items together, it will certainly make the process of getting a floorplan loan much easier. Apply now to start the NextGear Capital application process. If you have additional questions about our application process, we’ll get you connected to your representative.