Credit line can be used for dealership enhancements
Honda Federal Credit Union has been providing services to Honda associates, their family members and the Honda Companies throughout the world since 1966.
Now, Honda powersports dealers are able to take advantage of additional lending services not offered through American Honda Finance. Honda FCU is an independent, cooperatively owned financial institution not managed or owned by any Honda company. Instead, Honda FCU is a Honda partner, and the partnership is now extended to Honda dealership owners as part of an expansion of its business-to-business marketing initiative. No retail financing options are available to dealerships from Honda FCU.
With about 1,100 Honda motorcycle dealers across the U.S., the small business lending program titled HondaPower Financing figures to provide a boost those dealerships. Honda FCU has partnered with Member Business Lending, which serves more than 40 credit unions throughout the country, to promote the program.
The loans and lines of credit can be used by dealerships for purchasing or leasing real estate, facility renovation or expansion, or for working capital needs. In addition, dealers can use the Honda FCU loans to increase pre-owned inventory.
Don Gensler, business services consultant for Honda FCU, said the HondaPower program originated a few years ago with members of the credit union.
“The board of directors is made up of current and former employees of Honda,” Gensler said. “One the ideas that kept getting brought up at meetings was that the Honda motorcycle dealerships — independent small businesses — were getting great support on new product flooring and retail financing, but it was tough to finance pre-owned flooring or other parts of the business.”
A meeting last year with several Honda Powerhouse dealers at company headquarters in Torrance, Calif., led to the program’s Nov. 1 launch.
“We asked everybody in the room to raise their hand if they would be interested in HondaPower, and everyone in the room raised their hand,” Gensler said. “In the meantime we met with dealers to see what their needs were, and a couple of the big ones were building improvements and working capital, and having other financing sources for that.”
That members of the Honda FCU came forward with the idea of business-to-business lending is important to note.
“The Honda FCU associates stepped forward and said ‘Hey, your associates have money deposited with us, and we hear that you have a need.’ What a great service for our dealerships to evolve and improve around the credit union — for the use of promoting a Honda business,” Gensler said.
Gensler said he had already talked to personnel from about 100 dealerships just a few weeks into the program.
“Their primary needs are building improvements in order to become a better Honda dealer,” Gensler said. “If they’re leasing the building, this program would possibly allow them to get lending to purchase. The lines of credit for pre-owned inventory have also been popular. They’re looking for working capital so that they can act when they need to act.”
How does Honda FCU differentiate itself from what dealers might consider a typical SBA loan?
“It’s a competitive program in line with SBA rates, and it has money to lend and it’s willing to lend to Honda motorcycle dealerships,” Gensler said. “Some dealers have said they have long ties to their local institution, but they’re cutting their lines of credit back. Business lending is new to the Honda FCU, so we have lots of resources available to us.”
Other potential targets for the Honda FCU loans include parking lot improvements; new fixtures; paint or floor upgrades; new equipment for the service department; or internal signage.
One of the key ingredients of the program is that Honda FCU has Gensler dedicated entirely to HondaPower. A microsite provides dealers with an electronic inquiry form that takes about five minutes to complete, Gensler said.