Washington, D.C. – A new U.S. government program will provide up to US$5 billion in financing for auto parts suppliers. The announcement was made by the U.S. Department of the Treasury, which said that the Auto Supplier Support Program will give suppliers the confidence they need to continue shipping parts, pay their employees and continue their operations.
Many American auto parts suppliers are unable to access credit and are facing growing uncertainty about the prospects for their businesses and for the auto companies, due to the credit crisis and the rapid decline in auto sales.
“The Supplier Support Program will help stabilize a critical component of the American auto industry during the difficult period of restructuring that lies ahead,” said Treasury Secretary Timothy Geithner. “The program will provide supply companies with much needed access to liquidity to assist them in meeting payrolls and covering their expenses, while giving the domestic auto companies reliable access to the parts they need.”
The program will provide suppliers with access to government-backed protection that money owed to them for the products they ship will be paid, no matter what happens to the recipient car company. Participating suppliers will also be able to sell their receivables into the program at a modest discount, providing them with funding to operate their businesses and help unlock credit more broadly in the supplier industry. The program will be run through American auto companies that agree to participate in the program; suppliers to those companies that agree to maintain qualifying commercial terms will have the opportunity to request funding. If granted, the supplier will pay a small fee for the right to participate in the program.