Among franchises feeling the pain of the recession, car dealerships may have been hurt the worst.
As the big automakers faced bankruptcy, thousands of dealers lost their franchises. Those that managed to survive found that their usual source of credit — specialty auto lenders such as GMAC Financial Services and J.P. Morgan Chase Auto Finance — had tightened lending considerably, said the Wall Street Journal.
Some dealers have tried to get new franchises; others became used car lots or sold their property then rented it with the option to repurchase, said WSJ.com.
Many dealers are using their own money or trying to land private investors to keep their businesses afloat.
When Marva Sadler, chief operating officer of San Diego Saturn Retailers Inc., learned that GM would end production of Saturn vehicles, she decided to remake her business and sell electric cars.
Sadler estimates that she’ll need about $10 million to make the transition. She secured a personal line of credit and is counting on private-equity investors to raise the money.
Sadler is optimistic about the new direction she’s taking. “We plan to have cars available for order by October,” Sadler told the WSJ. “Some investors have already lined up; a lot of people are interested.”
This article was submitted by Rohit Arora, co-founder of Biz2Credit. Biz2Credit is a small business marketplace that connects entrepreneurs with financing options and advice to grow their business. Send all questions to