Loans at 3%? GARJA Helps Rural Georgia Businesses Borrow at Low Rates

November 13, 2018

There’s great news for small and medium-size business owners in rural Georgia: the recently passed Georgia Agribusiness and Rural Jobs Act (GARJA) opens up new access to low-interest loans to grow businesses and create jobs.

The terms are attractive. Businesses can borrow as much as $6.5 million at rates as low as 3 percent to do things like purchase equipment, expand facilities or simply increase working capital.

Loans are made through five approved firms, including the Georgia Rural Investment Fund, that are participating in the $100 million GARJA program that was signed into law by Georgia Gov. Nathan Deal in 2017.

“For far too long, Georgians living in the rural parts of our state have not benefited from the economic boom the rest of our state has seen,” Georgia Rep. Jason Shaw, a Republican of Valdosta who authored the GARJA bill, recently told The Valdosta Daily Times newspaper. “I’m extremely proud of the work of the Georgia General Assembly in providing practical, meaningful support to our rural neighbors and helping businesses in Georgia’s rural communities to prosper.”

Shaw’s work on GARJA was cited by the Rural Jobs Coalition when it named him Legislator of the Year for 2018.

Now economic development leaders and lenders participating in the program are trying to get the word out to thousands of business owners in rural Georgia who are eligible to participate in the program and might not have heard about it.

Are You Eligible?

GARJA loans are available to businesses having principal business operations in rural counties in Georgia with populations of fewer than 50,000 people, and three-quarters of Georgia’s counties meet that requirement. Here’s a list of all eligible counties. (The two dozen counties around metro Atlanta are too populous to participate.)

Businesses having fewer than 250 employees may be eligible to receive funding if the business is in one of the following industries: agriculture, manufacturing, healthcare, technology or transportation.

The loans can be as large as $6.5 million, and the Georgia Rural Investment Fund has full discretion in setting the specific terms and structures of the loans, such as interest only, floating rate, partially secured fixed rate or revolving lines of credit.

As with traditional lending, borrowers will have to post security such as assets, accounts receivable, inventory, real estate, personal guarantees or other collateral.

Business owners can use the proceeds to expand or renovate facilities, buy equipment, acquire property or to simply have more working capital.

For example, a timber mill could borrow under the GARJA program to invest in new technologically advanced equipment that would make its operations more efficient and increase productivity.

A distribution and warehousing company that is running out of space and needs to expand or open a new location could bring GARJA funds into its capital stack in cooperation with its existing bank partner at very attractive rates for minimal additional cost.

Great Time to Invest

Loans under GARJA are being made through five approved firms that have each been allocated $20 million to lend under the program.

One of the five firms approved to lend under GARJA is the Georgia Rural Investment Fund, LLC, which is affiliated with Affordable Equity Partners, Inc., which has financed numerous projects across the country since it was founded in 1997.

“From a macro-economic point of view, this is a particularly good time to be investing in your business,” said Jeffrey Nolan, Director of Corporate Development for the Georgia Rural Investment Fund. “The cost of capital is still near historical lows and the growth in gross domestic product remains consistently strong, with a favorable forecast over the near term. These two factors combine to make a more favorable environment for expanding your business.”

The Georgia Rural Investment Fund is actively looking for small and medium-sized business owners in rural Georgia who would benefit from extra capital to invest in their businesses. The fund’s sweet spot is loans between $2 million and $4 million with 5-year terms, although it has discretion and flexibility to lend smaller or larger amounts for shorter periods of time.

“Traditional subordinated debt lenders have historically shied away from or charged above-market interest rates to rural Georgia businesses because they struggle to understand the complexities and nuances of businesses operating in rural areas,” Nolan said.

Focusing exclusively on rural Georgia allows Nolan and his colleagues to better understand the unique challenges facing those businesses, and to provide more attractive financing than is otherwise available through traditional lending sources or programs such as Small Business Administration loans.

“In many cases, we work directly with our borrower’s existing bank to expand their loans beyond what the banks are allowed to lend,” said Nolan. “From a senior loan perspective, traditional banks often struggle to extend enough debt to get the project off the ground. Other times the borrower is not eligible for SBA loans or can’t afford the fees associated with them. In these instances, the Georgia Rural Investment Fund is an ideal partner. We can work with our borrower’s local bank to reduce fees, offer more financing and close loans more quickly, and we can do it without the typical regulatory red tape associated with bank and institutional lending.”

GARJA Pays for Itself

Georgia legislators created GARJA to provide a new source of low-interest capital for rural businesses in the Peach State that will, in turn, create new jobs, expand the economy and also attract more investment dollars.

GARJA will effectively pay for itself within a decade, according to a study by the Georgia Tech Research Institute that was conducted in early 2017.

If the full $100 million is invested in rural Georgia, more than 3,000 jobs would be created and they would generate $117 million in wages and salaries to result in an economic output of $413 million, the Georgia Tech study found.

In Summary

Business owners in rural Georgia can take out loans or equity investments under the new Georgia Agribusiness and Rural Jobs Act (GARJA) that was passed by Gov. Nathan Deal in 2017 to stimulate growth and expand access to capital.

GARJA investments primarily target agriculture, manufacturing, healthcare, technology or transportation sectors, must have fewer than 250 employees and must have principal business operations in designated counties with fewer than 50,000 people.

Businesses can borrow as much as $6.5 million at interest rates as low as 3 percent, which is often lower than traditional lending sources and makes it an attractive source of financing. Approved lenders including the Georgia Rural Investment Fund are actively seeking rural business owners who are looking for capital to invest in their companies.

Business leaders interested in GARJA funding can apply at www.garuralinvestmentfund.comor contact Jeffrey Nolan, Director of Corporate Development for the Georgia Rural Investment Fund, at 404-841-2227 or email him here

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