Dealerships often have to rely on cash advances to fund the growth of their business; a new offering from Dealer Benefit and Notre Dame Federal Credit Union intends to change that.

The lender and automotive retail product provider have partnered to create a dealership-specific loan program that launched Jan. 2. Dealers can use the flexible loans wherever they need it — a remodel or to buy land — and pay Dealer Benefit and the credit union back through the store’s vehicle and finance and insurance product sales, Scott Lear, president of Dealer Benefit, told Automotive News.

The product aims to take the place of dealer advances, transactions that can be far less transparent than a traditional loan, Lear said. Because advances come from insurers or administrators instead of banks, they are not bound by the principles of truth in lending, he said.

These flexible dealer loans are “a way to demystify that process” and “create a program and a product that’s really clear and straightforward,” said Robert Shane, chief innovation officer at Notre Dame Federal Credit Union.

Franchised and non-franchised dealers who have been in business for more than two years are eligible for funding in the national program, Lear said. Dealers will still have to state what they plan to use the funds for, Shane said, and provide details of past financials and F&I sales. They will then work with the credit union to repay the debt using the profit from vehicle and F&I sales.

With this model, dealers can “borrow money today on future sales where the customer is paying 100 percent of the loan back for you,” Lear said.

Notre Dame will consider, among other things, the size of a dealership, the number of contracts it sells and the length of time a store has been in business when determining the terms of a loan, Shane said.

“Our goal is never to avoid risk, it’s to mitigate that risk,” he said. “Our job is to figure it out, and every relationship is going to be a little different.”

The aim is to support dealerships’ growth, Lear said.

“I believe that dealers know how to operate and grow their business best,” he said. “And if we can bring a flexible way of doing that to them, we can help assist them in their communities and grow their business.”