GA CDFI Program is designed to provide access to capital to small businesses to create job opportunities in low-to-moderate income, minority, and other socially and economically disadvantaged (SEDI) communities, including women and minority-owned small businesses. The CDFIs currently operating in Georgia are positioned in the metro and rural underserved communities around the State of Georgia and have established relationships with local banks, local chambers of commerce, economic development authorities and small business owners that are recognizing the need for job creation on a local or personal level. By partnering with Banks, the CDFIs plan to leverage the SSBCI funds 10:1 over the life of the program.
In the GA CDFI program, DCA will enter into a performance-driven, contractual relationship with CDFIs. The CDFIs will assist the State of Georgia by making SSBCI funds more accessible to small businesses through the following processes/benefits:
- CDFI markets the SSBCI program and recruits banks to participate in the program.
- CDFI provides potential loans to banks or vice versa.
- CDFI and bank each underwrites their portion of loans individually.
- CDFI rate will be slightly lower than bank rate for a similar product for a lower overall blended rate to borrower.
- CDFI can originate loans for working capital, equipment and machinery, real estate, and other eligible activities under Treasury guidelines.
- CDFI collateral may be subordinate to bank collateral on CDFI-originated loans.
- CDFI collects data from banks and forwards reports to DCA to assist DCA in meeting SSBCI Treasury reporting requirements.
- CDFI offers the staff and commercial lending expertise/history to adequately meet both the financial requirements and social mission of the SSBCI program.
- CDFI ultimately achieves 10:1 leverage for a successful program on behalf of Georgia.
Federally designated CDFIs may participate in the Georgia CDFI program as a contracting entity in a direct lending capacity. In the case of the contracting entity, the State will advance SSBCI funds directly to the CDFI on a loan-by-loan basis. Upon receipt of the SSBCI funds, the CDFI immediately funds the loan to the small business. When loan principal and interest are paid back, the contracting entity CDFI may retain the funds and relend them into new SSBCI projects, subject to federal and state SSBCI regulations. Participation as a contracting entity/direct lender CDFI generally will be reserved for qualified non-profit, non-depository CDFIs.
All CDFIs participating in the Georgia CDFI program will be responsible for monitoring enrolled loans, servicing loan payments, and submitting quarterly and annual SSBCI funding reports to the State, and will earn fees for providing these services. CDFIs are required to sign a Lender Program Participation Agreement with the State upon approval as a participating lender in the Georgia CDFI program.
