Ga. Comp. R. & Regs. R. 110-31-.04 - Terms and Conditions
The following are the general terms and conditions of the two programs for the Georgia State Small Business Credit Initiative.
(1) Small Business Credit Guarantee (SBCG)
(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.
(2) GA LPP
(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.
(3) Terms
and Conditions applicable to all Georgia SSBCI Programs
(a) The State must obtain an assurance from
the lender affirming:
i. The loan has not been
made in order to place under the approved State SSBCI Program a prior debt that
is not already covered under the approved SSBCI Program and that is or was owed
by the borrower to the lender or to an affiliate of the lender.
ii. The loan is not a refinancing of a loan
previously made to that borrower by the lender or an affiliate of the
lender.
iii. The financial
institution lender will make available to the State of Georgia all books and
records related to the use of SSBCI funds, subject to the Right to Financial
Privacy Act (12 U.S.C. §
3401 et. seq.), including detailed loan
records, as applicable.
iv. The
financial institution lender is in compliance with the requirements of 31
C.F.R. § 103.121 related to verification of the identity of persons opening
accounts.
(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.
Notes
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