Compilation of Rules and Regulations of the State of Georgia
Department 110 - RULES OF GEORGIA DEPARTMENT OF COMMUNITY AFFAIRS
Chapter 110-31 - GEORGIA STATE SMALL BUSINESS CREDIT INITIATIVE LOAN PROGRAM DESCRIPTION
Rule 110-31-.04 - Terms and Conditions

(a) A Lender Program Participation Agreement is executed between an approved participating lender and GHFA EDFI.

(b) The SBCG Program will provide a 50% loan guarantee on a lender's loan. Each loan covered under the SBCG Program will stand alone with a maximum guarantee of 50%.

(c) Underwriting is performed by the primary lender and shared with DCA to streamline the approval process.

(d) Lenders will pay a processing fee as determined by DCA for all loans submitted for enrollment.

(e) Borrowers will pay an initial fee equal to 2% of the guarantee amount for loan funds advanced, along with an annual fee of 0.5% of the outstanding guarantee balance for each subsequent year. For all loans, the fee will be paid at the time of the loan closing and the beginning of each calendar year.

(f) The maximum individual loan amount eligible for the SBCG guarantee is $1,000,000.

(g) Lender Concentration Limit - The maximum guarantees that may be set aside at any time with respect to a single lender will generally be $5,000,000.

(h) The maximum term for SBCG guarantee on lines of credit will generally be 24 months.

(i) The maximum term for SBCG guarantee on amortizing loans will generally be 60 months.

(j) The SBCG is a deficiency guarantee; lenders must first liquidate collateral before claiming the guarantee.

(k) SBCG will target businesses with an average borrower size of 500 employees or less, but credit cannot be extended to businesses with more than 750 employees.

(a) A Master Loan Participation Agreement is executed between an approved participating lender and GHFA EDFI.

(b) The approved participating lender originates the loan, and Georgia through GA LPP may purchase up to 25% of the loan.

(c) Underwriting is performed by the primary lender and shared with DCA to streamline the approval process of the purchased participation.

(d) A written commitment letter is executed between the primary lender and GHFA EDFI.

(e) The lender closes the loan and sells the position to DCA.

(f) The lender keeps all its standard fees.

(g) Loan servicing is performed by the primary lender, which shares proportional debt payments with DCA.

(h) DCA will be in a subordinate lien position, and the primary lender will have first claim to all recoveries until its losses are covered.

(i) Rates, fees, and terms are determined by the primary lender. However, a nominal processing fee may be charged on applications submitted to use the GA LPP.

(j) DCA may provide a lower interest rate than the primary lender for a limited period of time in order to improve the borrower's debt coverage ratio.

(k) The primary lender has the unconditional right to repurchase the participation sold in the original loan to GHFA EDFI at any time.

(l) GA LPP will target businesses with an average borrower size of 500 employees or less, but credit cannot be extended to businesses with more than 750 employees. Average projected loan size is between $100,000 and $5,000,000. All loans over $250,000 are subject to additional review and approval by GHFA EDFI. Maximum participation purchased is $1,250,000.

(a) The State must obtain an assurance from the lender affirming:

(b) Monthly and Quarterly Reporting Requirements: All lenders in the Georgia SSBCI program are required to submit monthly and quarterly reports to DCA. Details on the deadlines and format of these reports are available from DCA directly.

(c) Lender Approval Criteria: Each lender seeking participation in the State of Georgia's SSBCI programs will undergo a thorough review process by the State to ensure that the lender has the adequate commercial lending experience, financial and managerial capacity, and operational skills. Regulated financial institutions must meet certain criteria established by their regulators to maintain their charters. DCA will continue to work closely with the Georgia Department of Banking and Finance on the selection process for participating financial institutions including banks and credit unions. Principal evaluation factors of lenders will include capital adequacy, asset quality, management, earnings, liquidity and sensitivity to market risk.

(d) Georgia's SSBCI programs may not enroll the unguaranteed portions of SBA-guaranteed loans. This prohibition also applies to the unguaranteed portion of other federally generated loans.

(e) Underserved Markets. Georgia's SSBCI Programs will strive to reach underserved markets (including women- and minority-owned businesses as well as small businesses in low- and moderate-income communities, in minority communities, and in other underserved communities through program outreach.) SBCG is anticipated to serve primarily smaller banks and credit unions. GA LPP is expected to increase access to capital to small businesses in all markets by enabling lenders to diversify their risk by sharing exposure with the State.