Dealer Floor Plan Financing
Dealer Floor Plan Financing is a form of retailer financing for large ticket items displayed on showroom floors or lots. Specialty lenders, traditional banks, and finance arms of manufacturers provide the loans to retailers to purchase items and they are then repaid as the items are sold.
Truck and trailer dealerships utilize floor plan financing to run their new and used retail businesses. Floor planning is a type of inventory financing.
Floor planning is offered by many types of lenders, big and small.
Specialty finance companies fill an important role in providing credit for dealerships to purchase inventory.
For example, dealerships for trucks, recreational vehicles, and boats, as well as home appliance retailers will turn to floor plan loans to purchase inventory.
Inventory financing is an asset-backed, revolving line of credit or short-term loan made to a company so it can purchase products for sale.
Those products, or its inventory, serve as collateral for the loan if the business does not sell its products and cannot repay the loan.
Inventory financing empowers the dealer to bring in stock to their yards and make the product available to the customer immediately while delaying the necessity to pay the manufacturer until the product is sold to the end-user, freeing up cash flow for other capital expenditures and activities.