On March 26, 2020, the New Jersey Economic Development Authority (NJEDA) initiated numerous programs aimed at helping New Jersey businesses weather the COVID-19 crisis.
The programs include, among others:
- grants for small businesses;
- zero-interest loans for mid-sized companies;
- support for certain lenders; and
- technical support grants
Because funds are limited and many of the programs are run on a first come, first served basis, we urge the business community to apply at the earliest possible opportunity after the application process is opened.
Small Business Emergency Assistance Grant Program
This program provides grants up to $5,000 to NJ businesses that have between 1 and 10 full time equivalent employees. The grant funds may be used for payroll and working capital support, but cannot be used for capital expenditures. Applications are expected to open the week of March 30, 2020 and will be considered on a first-come, first served rolling basis.
Small Business Emergency Assistance Loan Program
Under this program, NJ businesses with less than $5 million in annual revenues that have been in existence for at least one year may qualify for working capital loans of up to $100,000. These loans that will have 10-year terms with zero percent interest for the first five years with deferred repayments for 12 months. Interest after the first five years will reset to the EDA’s prevailing floor rate (capped at 3.00%). Home-based businesses, and businesses related to gambling or adult services are excluded. Applications are expected to open the week of March 30, 2020 and will be considered on a first-come, first served rolling basis.
Community Development Finance Institutions (CDFIs) Programs
The NJEDA is partnering with the State’s CDFIs [1] to support them in providing financial assistance to micro and small business owners. Specifically, under the CDFI Emergency Assistance Grant Program, a CDFI may apply for up to $250,000 in funding to support its scale up of origination, technical support and underwriting capacity. The other program is the CDFI Emergency Loan Loss Reserve Fund designed to provide first loss position loan guarantees to CDFIs for working capital loans to NJ businesses. The CDFIs will be required to comply with specific loan program parameters to fit into the program. Time frames for applications have not yet been announced.
NJ Entrepreneurship Guarantee Program
The goal of this program is to provide incentives for private sector investors to provide working capital loans to NJ’s small entrepreneurial businesses. The NJEDA will guarantee 80% of the total investment amount up to $200,000 per NJ entrepreneurial company. The business must have: a minimum of 50% of its employees in NJ, less than 25 total employees, revenues under $5 million, and corporate headquarters in NJ, among other factors. The company must be in in one the following sectors: advanced manufacturing, information technology, life sciences, finance/insurance, clean energy, food/beverage, advanced transportation or film/digital media. Investors can be individuals, trusts, or corporations and must already have an equity interest and equity position in the company. They need not be NJ residents. A date for opening the application process has not yet been set.
Small Business Emergency Assistance Guarantee Program
This program provides a 50% guarantee not to exceed $100,000 to NJEDA “Premier Lenders [2]” that issue working capital loans or lines of credit to support business continuity for a range of COVID-19 consequences, including, reduced revenues, employee shortage, supply chain impact. Businesses eligible for these loans must have $5 million or less in annual revenue and be in existence for at least one year; home-based businesses ineligible. Premier Lenders will receive guidance from the NJEDA is the coming weeks. Be sure to check with the Premier Lenders for information.
Emergency Technical Assistance Program
The NJEDA will provide $150,000 in total to support technical assistance to NJ businesses applying for SBA or State COVID-19 relief programs. The organizations offering the services will be able to assist with the application processes for these programs, including preparing financial information, packaging application information and documentation, and completing and submitting the applications. A list of approved technical assistance providers will be issued soon.
NJEDA Payment Moratorium/Loan Fee Forgiveness
For existing NJEDA business customers, the NJEDA has approved a 3-month payment moratorium for eligible entities on direct loans and Premier Lender participation loans. The NJEDA is also allowing collateral releases, subordinations and substitutions on business assets, as well as waiving late fees on loan repayments and loan modification fees. The factors for eligibility include, among other things, that the borrower cannot have any active litigation with the NJEDA or any recent delinquencies on existing NJEDA loans. In conjunction with this program, the NJEDA is also waiving certain requirements related to employee presence in the office under its Grow NJ program, HUB (Urban Transit Hub) program, Business Employment Incentive Program and Business Retention and Relocation Assistance Grant Program.
NJ COVID-19 Business Support Eligibility Wizard
Additional information regarding these NJEDA programs can be found at https://faq.business.nj.gov/en/articles/3838662-what-new-state-financial-support-programs-is-my-business-eligible-for-how-do-i-use-the-eligibility-wizard .
In addition, the NJEDA has launched an on-line questionnaire that can be filled in by potential applicants that provides a list of programs that an applicant may be eligible for based on the applicant’s responses. It is user-friendly and does provide a summary of programs that an applicant should consider. It covers NJEDA programs, as well as certain SBA programs. The platform will be updated periodically and can be accessed at https://assistance.business.nj.gov/ .
[1] NJ’s CDFIs are: United Counties Development Corp.; Greater Newark Enterprises Corp.; Regional Business Assistance Corp.; New Jersey Community Loan Fund; Cooperative Business Assistance Corp.
[2] NJEDA Premier Lenders are listed on the NJEDA website.
This article is for informational purposes only and is not intended to constitute, and does not constitute, legal advice.
If you would like more guidance, please contact your Brown Moskowitz & Kallen, P.C. attorney at (973) 376-0909 via the office extensions below or the mobile telephone numbers provided.
Stuart Brown
Office Extension: 1118
Mobile: (908) 770-0166
Kenneth Moskowitz
Office Extension: 1112
Mobile: (908) 770-0160
Norman Kallen
Office Extension: 1114
Mobile: (908) 770-0165
Steven Rowland
Office Extension: 1124
Mobile: (973) 879-0544
Keith Marlowe
Office Extension: 1120
Mobile: (973) 568-7559
Richard West
Office Extension: 1126
Mobile: (973) 229-7928
Frederic Tudor
Office Extension: 1122
Mobile: (973) 476-8139
Kristina Brown
Office Extension: 1116
Mobile: (908) 239-7625
Michele-Lee Shapiro
Office Extension: 1130
Mobile: (201) 221-6814
Emilio Lamanna
Office Extension: 1129
Mobile: (516) 554-2460