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DCA describes loan guarantees and participation under the State Small Business Credit Initiative
Summary
DCA said Georgia deployed about $50 million under the federal SSBCI program and now runs two programs: a loan-guarantee program (guarantees up to 50% of a loan, up to $400,000) and a loan-participation program (DCA can take up to 25% and $250,000); DCA reports low default rates and continued outreach to local lenders.
Rusty Haywood reviewed Georgia’s use of the State Small Business Credit Initiative (SSBCI) and two programs DCA now operates: a loan-guarantee program and a loan-participation program.
Haywood said the state originally received roughly $50 million through SSBCI, deployed that funding and later continued similar programs after federal oversight ended. DCA guarantees up to 50% of a loan amount (capped at $400,000) to reduce lender risk; in the participation program DCA may take a subordinate position of up to 25% and up to $250,000 on a loan.
Haywood told members the banking community has generally embraced the programs, DCA has an in-house credit team that reviews applications after the bank underwrites loans, the programs have a low default rate in single digits, and several million dollars remain available as loans turn over. Members raised concerns about whether rural applicants would get priority; Haywood said the program is available statewide but that in practice many applicants and loans have come from rural counties.
On safeguards, Haywood said the bank performs initial underwriting and DCA performs a secondary review; the state is generally in a subordinated position and bears limited recourse only after lender remedies are exhausted.
"We've loaned out or guaranteed somewhere north of $60,000,000 as funds have come back in and recycled through, leveraged probably about $350,000,000 through the process," Haywood said.
