The GA SBCG, or Small Business Credit Guarantee, will provide a 50% credit guarantee to the lender with a conversion option, whereby participating lenders may choose to convert any enrolled credit guarantee to a 10% (of the remaining principal) deposit to a loan loss reserve account where the reserve can cover up to an 80% loss on any individual loan.
Initially, the State will reimburse from SSBCI funds 50% of losses incurred on an enrolled credit by a Lender that is not in default of its agreement with the State. Guarantee funds will generally be available to Lenders on a first-come, first served basis. For enrolled credits that convert, mature or are retired early, the state will reserve an allocation for the Lender for 120 days for new qualified credits. The State will generally charge lenders 2.0% of the outstanding guarantee for the first 12 months and 0.5% annually of the outstanding guarantee for the first 12 months and 0.0416% monthly (0.5% annually) thereafter to cover the ongoing cost of administration. However, DCA/GHFA reserves the right to adjust these fees annually as necessary to incentivize conversion in order to meet the SSBCI 10:1 leverage requirement.
The Lender is encouraged to move loans to a Risk Reserve Pool ("RRP") under which a Lender may receive up to 80% reimbursement for losses on individual credits, but is limited to total guarantees of only 10% of the credit outstanding for total credits in the RRP. (The 80% limit on reimbursement preserves the required 20% lender capital at risk on each credit.) Amounts in the RRP may be used in addition to the 50% reimbursement for credits not in the RRP to bring the total reimbursement of those credits to 80%, if sufficient funds exist in the RRP.
In addition to the up to 80% reimbursement on a single credit, the PPA provides additional incentives to Lender to move credits to the RRP including: (i) the monthly administration fee is waived for loans in the RRP, and (ii) the amount of the guarantee released (40% of the outstanding credit) by moving the loan to the RRP will be reserved for the lender for 120 days for new qualified credits.
All lenders seeking approval as participating lenders in SBCG 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 SBCG lender is to complete an SBCG lender application package and submit it to DCA for review. Following review and notification from DCA of approval, the lender and the State will then execute a SBCG Program Participation Agreement.
Please click on the link below for a complete digital copy of the lender application package for the SBCG program. Please note that Exhibit C, the Program Participation Agreement, is a draft for review purposes only. The PPA should not be signed by the lender until after DCA has formally approved the lender for participation in the Georgia SSBCI. At that time, the appropriate PPA document will be submitted to the lender for execution.
SBCG Application Package, which includes: 1) Cover Letter; 2) Exhibit A, Regulatory Order Certification; 3) Exhibit B, Georgia SSBCI Training Request Form; and, 4) Exhibit C, Draft SBCG Program Participation Agreement. (DOC)