Start-up Falcon Financial is crafting a new type of security that lets investors buy into the cachet of certain automakers.

The Stamford, Conn., firm is making loans to new-car dealers for up to three times the value of their inventory and property-using its determination of the overall enterprise value of the dealership as collateral.

Falcon has developed a proprietary scoring model that uses past sales of auto brands and specific dealers to determine a dealer's enterprise value.

Auto brands from Hyundai to Mercedes are included in the model, and Falcon lends against the dealer's expected cash flow.

The brand-scoring matrix is patterned after one used by investors in securitized "quick service" or fast-food restaurant returns, said Falcon chief executive Vernon Schwartz.

As returns from a Wendy's franchise differ from the returns of a McDonald's, returns from a Toyota franchise differ from those of an Oldsmobile franchise-in a predictable way, Mr. Schwartz said.

Traditionally, auto dealers who were looking for capital to upgrade stores or acquire other dealerships had to rely on short-term loans from banks or manufacturers.

But Falcon said it is offering better terms and larger amounts than a bank does because it figures in franchise value rather than just property value.

The business is not as tricky as it sounds, Falcon said.

"There's a perception out there that new-car dealerships are a high-risk business," Mr. Schwartz said. But he said that a Dun & Bradstreet study showed that failure rates for dealerships are comparable to those for restaurant franchises, at less than 1%.

Falcon is 40%-owned by Sun America Life, 40% by Goldman, Sachs & Co., and 20% by its management.

The company is starting small-in 1998, Falcon expects to lend about $150 million, and to securitize about $100 million of that. But it has big plans.

"New-car dealerships have annual sales of $600 billion," Mr. Schwartz said. "It's unbelievable that what we're doing hasn't been done before."

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