The Small Business Jobs Act of 2010 (the “Act”) became law in the fall of 2010. The Act created the State Small Business Credit Initiative to strengthen state lending programs that support small businesses and manufacturers. The $1.9 trillion American Rescue Plan Act of 2021 (ARPA) reauthorized the Small Business Jobs Act of 2010 to provide $10 billion to fund the State Small Business Credit Initiative (SSBCI 2.0) as a response to the economic effects of the COVID-19 pandemic.
Georgia is allocated a total potential funding amount of $199,616,860. These funds will address the following requirements:
- Outreach to support business enterprises owned and controlled by socially and economically disadvantaged individuals.
- Outreach to very small businesses (less than 10 employees).
- Reasonable expectation to achieve a 10:1 leverage of private funds.
- Ability to deploy funds in a timely manner.
The State of Georgia application to the U.S. Treasury was approved and the allocation agreement executed in November 2022. GHFA EDFI/Georgia Department of Community Affairs (DCA) is the administrator of the program.
Currently, Georgia’s SSBCI offers five programs.
- GA LPP (Georgia Loan Participation Program) with SSBCI funding will be used to purchase a portion of a loan originated by a participating lender to an eligible small business borrower. Interest rates, maturity, collateral, and other loan terms are negotiated between the borrower and the lender. The primary lender conducts all the customer interaction, including payment processing and loan workouts. GA LPP can use SSBCI funds to purchase up to 25% of a loan originated by a participating lender to an eligible small business borrower. However, the GA LPP can purchase up to 30% of a loan originated by a CDFI bank.
- Georgia SBCG (Small Business Credit Guaranty) with SSBCI funding will be used to guarantee 50% of a loan originated by a participating lender to an eligible small business borrower. The State will reimburse from SSBCI funds 50% of losses incurred on an enrolled credit by a Lender that is not in material default of the PPA. The 50% guarantee provides the required 1:1 leverage of private to SSBCI funds and 50% lender capital at risk. Interest rates, maturity, collateral, and other loan terms are negotiated between the borrower and the lender. The primary lender conducts all the customer interaction, including servicing their payments and loan workouts.
The Georgia CDFI Program (GA CDFI) is a companion loan program among the non-depository Community Development Financial Institutions (CDFIs) and the private lending institutions. This program is accomplished through a combination of resources: SSBCI funds administered by DCA/GHFA in conjunction with performance-driven agreements with the CDFIs. GA CDFI will provide access to capital to the borrowers, gap financing for the banks, low interest rates and attractive terms. Georgia businesses will be equipped to receive significant incentive to start projects, expand operations, improve facilities or equipment, or access needed working capital. CDFIs are encouraged to participate in projects with a leverage of 10:1, with no less than a 1:1 leverage.
The Georgia Venture Capital Program (GA VC Program) will help grow venture capital for small businesses at the earliest stages of development, which Invest Georgia will operate as a multi-fund program. Invest Georgia is an instrumentality of the State of Georgia and has authority under O.C.G.A § 10-10-10 to operate venture capital programs intended to increase the amount of private investment capital available for Georgia-based businesses. DCA/GHFA Economic Development Financing, Inc. executed a Memorandum of Agreement with Invest Georgia to operate the GA VC Program. An objective of the GA VC Program will be to improve regional entrepreneurial and investment ecosystems that support economic growth, innovation development and job creation.
The Georgia Equity Direct Program will provide an attractive source of capital for investments in startups and eligible businesses. Investments will be made alongside diverse venture funds, non-profit seed funds, angel funds and other investors that present a compelling economic development case. Invest Georgia will manage the direct co-investment program, which will provide flexibility for supporting a diverse portfolio of small businesses.
Advantages and Opportunities for Georgia Lenders
- Credit enhancements to strengthen bank loans and reduce risk
- Delegated lending model where lenders manage underwriting
- Streamlined procedures and quick response to project loan requests
- Opportunity for CRA credit
How to Become an Approved Lender
All lenders seeking approval as participating lenders in the SSBCI programs must undergo a vetting process whereby the State will evaluate the lender on management and lending experience as well as financial capacity and ability. The first step to becoming an approved lender is to complete a lender application package and submit it to DCA for review. Please contact our office to obtain an application package.
Small business are eligible to participate. Click the link above for more information.