Item 399/2025
Final
City of Garden Grove
INTER-DEPARTMENT MEMORANDUM
To:
Lisa L. Kim From: Ursula Luna-Reynosa
Dept:
City Manager Dept: Economic Development and
Housing
Date: 10/28/2025
Subject: Approval of an Agreement with Grow America Fund, Inc. to establish the Grow Garden Grove Fund to provide loans for Garden Grove small businesses. (Cost: $250,000)(Action Item)
OBJECTIVE
For the City Council to approve the Small Business Lending Agreement (Agreement) between the City of Garden Grove (City) and Grow America Fund, Inc. (GAF) to establish the Grow Garden Grove Fund, a small business lending program that provides access to capital for Garden Grove businesses.
BACKGROUND
The City is committed to expanding economic opportunities and supporting the growth of small businesses within the community. Many local businesses face challenges in securing traditional financing to expand operations or create new jobs. To help address this gap, staff has identified a partnership opportunity with GAF, a non-profit Community Development Financial Institution (CDFI) and U.S. Small Business Administration (SBA) licensed Small Business Lending Company (SBLC).
As a CDFI, Grow America Fund is certified by the U.S. Department of the Treasury to expand access to capital in underserved and economically disadvantaged areas, helping small businesses that may not qualify for traditional financing. As an SBLC licensed by the SBA, it is authorized to issue and service SBA 7(a) guaranteed loans nationwide, offering borrowers flexible terms backed by federal guarantees. Through this partnership, the City will establish the Grow Garden Grove Fund, a revolving loan program that leverages the City’s investment to provide SBA 7(a) guaranteed loans to eligible small businesses in Garden Grove.
DISCUSSION
Under the Agreement, the City will make an initial investment of $250,000 to provide the seed capital for the Grow Garden Grove Fund. GAF will leverage the seed capital by selling Item 399/2025
the SBA guaranteed portion of the loans allowing a four-to-one loan leverage resulting in a $1,000,000 loan fund to assist qualified businesses in Garden Grove. As a revolving loan fund, loan payments from issued loans will be reinvested back into the Grow Garden Grove Fund to finance new eligible borrowers, creating a sustainable and ongoing source of small business financing within the City.
Key provisions of the Agreement include:
The City’s investment will be structured as a performance-based grant used solely for eligible SBA-guaranteed loans within Garden Grove.
GAF will handle all underwriting, approval, closing, servicing, and reporting of loans in accordance with SBA regulations.
City staff will support marketing, outreach, and business referral efforts related to the program.
The Agreement includes a minimum initial term of 24 months, after which either party may terminate with 90 days’ notice.
Depending on program performance, a portion or all of the City’s investment may be retained by GAF or returned to the City as outlined in the Agreement’s performance benchmarks.
GAF will provide quarterly portfolio and performance reports to the City.
FINANCIAL IMPACT
The City’s investment of $250,000 will be funded from the Economic Development and Housing Department’s existing operating budget, and no additional appropriations are required.
RECOMMENDATION
It is recommended that the City Council:
Approve the Agreement between the City and Grow America Fund, Inc. to establish the Grow Garden Grove Fund; and
Authorize the City Manager, or designee, to execute the Agreement, including any minor modifications or amendments as appropriate, and any other documents necessary to implement the Agreement on behalf of the City.
ATTACHMENT(S)
1. Agreement with Grow America Fund, Inc.