1. _______________________________
Georgia Department of Community Affairs
_______________________________
Smyrna Business Association
August 2, 2012

2. DCA incentives for Smyrna - Existing and Potential -
Opportunity Zones
State Small Business Credit Initiative (SSBCI)

3. Opportunity Zones State Job Tax Credit
All of georgia’

4. Job Tax Credit – Example of Benefits
Standard Tier 4 JTC:
Businesses must create at least 25 net new jobs to qualify for the credit of $750 per job
May take the credit against 50% of income tax liability
Credit limited to businesses engaged in manufacturing, warehousing and distribution, processing, research and development, tourism, broadcasting, and telecommunications (i.e. Business Enterprise definition)

5. Opportunity Zones O.C.G.A. 48-7-40.1(c)(4)
General Strategy
Encourage local governments to use existing redevelopment statutes in an innovative fashion to revitalize blighted commercial, industrial and adjoining residential areas
Reward local governments and businesses that undertake such revitalization with access to maximum State Job Tax Credits
Operate state-wide, wherever eligible revitalization and redevelopment needs occur (rural, urban and suburban).
Support bottom up, locally driven initiatives through local collaborative partnerships

6. Tax Incentives State designation of an Opportunity Zone allows:
ANY businesses (including retail) within the area to qualify for the State’s maximum job tax credit
Lower job creation threshold to 2 jobs to qualify for the state’s maximum job tax credit of $17,500 per job over 5 years (3,500 per year)
Allow credit against 100% of income tax liability, with excess credit available to claim against payroll withholding

9. Application, regulation, maps and more available at: www.dca.ga.gov/oz
For questions on Smyrna’s OZ please contact:
Jered Sigmon (678)
For general questions on OZ application process:
Joanie Perry (404)
For questions about how to take the tax credit:
Dawn Sturbaum (404)

10. _______________________________
Georgia Department of Community Affairs
_______________________________

11. History & Background of State Small Business Credit Initiative (SSBCI)
Component of Small Business Jobs Act,
bi-partisan legislation signed into law on Sep. 27, 2010
$1.5 billion set aside for SSBCI, managed by U.S. Treasury, to strengthen state-run lending programs to support small business
Georgia’s allocation is $47,808,507
Requirement for the state to generate overall 10:1 leverage

12. Advantages and Opportunities for Georgia Lenders
Credit enhancements to strengthen bank loans for small businesses
Delegated lending - Lenders manage underwriting process
SSBCI program - quick turnaround and streamlined format (days)
Opportunity for CRA credit

13. Advantages and Opportunities for Georgia Lenders
Opportunity to improve Safety and Soundness reviews
A distinguished panel of state and federal regulators participating in the roll-out of the SSBCI on 5/23/12 indicated a general consensus that lenders participation in the SSBCI Program is viewed positively by Safety & Soundness and Consumer Compliance Examiners. This resource panel continues to provide advice and assistance as program implementation progresses.
Georgia Department of Banking and Finance; Federal Reserve; Federal Deposit Insurance Corporation; and Office of Comptroller of Currency.

14. What Does Georgia SSBCI Offer?
Three new initiatives available to private lenders to expand small business lending
GCAP (Georgia Capital Access Program) - $10 million
(Risk reserve pool funded with borrower/lender fees matched with SSBCI funds)
SBCG (Small Business Credit Guarantee) - $17.8 million
(50% loan guarantee with a conversion option into a risk reserve pool offering up to 80% reimbursement)
Georgia Funding for CDFIs - $20 million
(Loan participation program specifically designed for underserved SBs)

15. SSBCI – General Eligibility Criteria
Loan proceeds can be used for eligible “business purposes” including:
Start-up costs
Working capital
Business procurement, franchise fees
Equipment & inventory
Purchase, construction, renovation, or tenant improvements of eligible place of business

16. SSBCI – General Eligibility Criteria
Refinancing is not eligible; however, renewals are eligible under certain conditions … as one example… performing lines of credit that balloon and become due … new balance must increase by at least 10%
Passive real estate investment generally is not eligible. However, exception should at least 51% of existing commercial RE be occupied by owner).

17. SSBCI – Eligibility Criteria (cont.)
Eligible small businesses include corporations, partnerships, joint ventures, cooperatives, sole proprietorships, state-designated charitable & other non-profit institutions.
SBs generally defined as 500 or fewer employees
SSBCI participation generally limited to $500,000 or less, with exceptions and target amounts tailored for each program
Participating lenders and borrowers will be required to provide certain assurances and certifications as required by US Treasury SSBCI guidelines.

18. GCAP (Georgia Capital Access Program)
Provides risk reserve pool for lender by matching a required fee (2% to 7%) paid by the borrower, lender or combination, into a loan loss reserve fund for enrolled loans
SB loans of $500,000 or less (exceptions possible)
In case of default on enrolled loans, claims may be made against the loan loss reserve account for loss of principal and up to 90 days of accrued, but unpaid, interest
Borrower/bank fee may be financed through resulting loan.
Up to 100% of covered loan balance losses can be claimed.

19. GCAP CASE SAMPLE – Bldg Expansion & Inventory for Small Business
Total Project Cost
$1,500,000
- Private Bank Financing
$1,350,000
- Borrower Equity
$ 150,000
- GCAP enrolled loan amt
$ 500, (amts > $500k require exception)
Lender/Borrower Fee
$ 20, (assuming 4% fee)
GCAP Match
$ 20,000
Total $ Placed in Reserve
$ 40,000

20. SBCG (Small Business Credit Guarantee)
The (“SBCG”) Program provides a 50% loan guarantee with a option to convert to risk reserve pool .
Enrolled loans are covered with a 50% loan guarantee; loans converted to risk reserve pool can be covered up to 80%.
SSBCI funds are leveraged with private capital from eligible lenders (banks, credit unions, qualified private lenders, and CDFIs).
Max terms for SBCG guarantee:
Lines of credit - 24 months
Amortizing loans – 48 months
Deficiency guarantee – Lender must diligently pursue collection from borrower prior to filing claim.

21. SBCG Case Sample – Accounts Receivable for Software Small Business
50% Guarantee Pool
Risk Reserve Pool
Total Project Cost
$250,000
- Conventional Bank
$200,000
- Borrower Equity
$ 50,000
- SBCG Guaranteed Amt
$100,000
Initial Fee – 2%
$2,000 NA
Annual Fee
½ of 1% of guarantee balance $0
Contribution to RRP assuming loan balance of $180,000 at the end of Yr 1
$20,000 (10% of loan balance plus initial fee)
Page 17 of 32

22. GA Funding for Community Development Financial Institutions (CDFIs)
GA Funding for CDFIs is a loan participation program specifically designed to increase access to capital for Georgia’s underserved small businesses (minority- and women-owned small businesses, and small businesses located in low- and moderate-income, minority, and other underserved communities).
CDFIs are private financial institutions certified by the U.S. Treasury to provide credit and financial services to underserved markets and populations.

23. GA Funding for CDFIs – Two Options
State will enter into contractual relationship with CDFIs. Participating CDFIs will earn fees for underwriting, closing, and servicing SSBCI loans through participating in one of two capacities:
Loan originator/servicer – State forwards SSBCI funds directly to borrower. Receivables are returned to the State
Generally for-profit CDFI’s attached to commercial banks
Contracting entity – State forwards SSBCI funds to CDFI; CDFI loans SSBCI funds to borrower. CDFI may retain SSBCI loan payments and revolve these funds into future SSBCI projects.
Generally non-profit CDFI’s operating independently

24. GA Funding for CDFIs Case Sample – Bldg renovation & equipment for restaurant
Total Project Cost
$600,000
- Private Bank Financing
$440,000
- Borrower Equity
$ 60,000
- CDFI (with SSBCI funds)
$100,000
Terms
Private bank – 1st lien on bldg & equip; CDFI: second lien
Bank interest rate: 6%; CDFI interest rate: 5%
Contracting entity CDFIs retain and revolve interest and principal payments into new SSBCI projects.
Originator/servicer CDFIs receive principal & interest payments and remit them to state CDFI fund.
Both contracting entity & originator/servicer CDFIs earn fees for loan underwriting, closing (customary) and servicing (1% of balance payable monthly)

25. Getting Started – What You Need to Know…
Applications, Program Participation Agreements, Loan Enrollment Procedures, Transaction Documents, and Reporting Requirements & Compliance …
No nonsense Delegated Lending means days until lender can begin to enroll SB loans …

26. For more info, contact: www.georgia-ssbci.org
Holly Hunt, SSBCI Program Manager
(404) ;
Brian Williamson, Assistant Commissioner
(404) ;
Fax: (404)