Because of the credit crisis and the rapid decline in auto sales, many of the nation’s auto parts suppliers are unable to access credit and are facing growing uncertainty about the prospects for their businesses and for the auto companies that rely on the parts they ship. This program is intended to help break this cycle and provide confidence in the supplier base. This segment of the auto industry employs more than 500,000 workers across the country.

• 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. This will provide suppliers with desperately needed funding to operate their businesses and help unlock credit more broadly in the supplier industry.

• The program will be run through domestic auto companies that agree to participate in the program. Any domestic auto company is eligible to participate in the program. General Motors and Chrysler have already agreed to participate in the program, and will have fully operational purchase programs established shortly. Suppliers to those companies that agree to maintain qualifying commercial terms will have the opportunity to request this government backed protection. If granted, the supplier will pay a small fee for the right to participate in the program.

• The Treasury Department has made available up to $5 billion in financing under this program.

Resources

• Auto Supplier Support Program: Stabilizing the Auto Industry at a Time of Crisis