The New Jersey Economic Development Agency (NJEDA) continues to unveil new programs designed to lessen the economic fallout of the coronavirus (COVID-19). The latest, known as the NJ Entrepreneurship Guarantee Program, seeks to encourage private sector investors to provide additional working capital loans to New Jersey-based start-ups in which they are already investing.
“The financial support of angel investors, venture capital firms, and other similar investment entities is the lifeblood that drives the innovation economy and entrepreneurship in the Garden State,” NJEDA Chief Executive Officer Tim Sullivan said in a press statement. “In these challenging times, we remain committed to ensuring that investment dollars continue flowing to emerging technology and life sciences companies in the Garden State as we work toward fulfilling Governor Murphy’s vision of creating the most diverse and inclusive innovation ecosystem in the nation.”
The NJ Entrepreneurship Guarantee Program will provide an 80 percent NJEDA guarantee for an eligible new loan or convertible note by a qualified investor into a New Jersey qualified business, not to exceed a $200,000 guarantee per company. To qualify, the investor must have supported the company in the form of a convertible note, SAFE (simple agreement for equity) or equity investment as of March 9th, 2020 (or prior). The funding for the guarantee must have been made after March 26, 2020, the date of Gov. Murphy’s Executive Order 103 declaring a State of Emergency and a Public Health Emergency in New Jersey.
Investor Applicant Requirements
Investors participating in the NJ Entrepreneurship Guarantee Program must satisfy the following requirements:
- The investor applicant has provided previous funding to the New Jersey company in the form of a convertible note, SAFE or equity as of March 9th, 2020 or prior
- The same investor applicant is providing/has proved funding after the date of the New Jersey State of Emergency (March 26, 2020), which serves as the object of the sought guarantee
- The investor applicant is not a founder/employee of the company
- The note for which the guarantee is being sought has at least a one-year maturity, with no current payments and no collateral
The Entrepreneurial Business Requirements
Businesses participating in the NJ Entrepreneurship Guarantee Program must satisfy the following requirements:
- Have a minimum of 50% of employees in New Jersey (as of December 31, 2019)
- Have fewer than 25 total employees at the time of application and as of December 31, 2019
- Have under $5 million in trailing twelve-month revenues
- Have a corporate headquarters in New Jersey (including at least one C suite member with a principal office in New Jersey)
- Fall under one of the following eight sectors: advanced manufacturing, information/technology, life sciences, finance and insurance, clean energy, food and beverage, advanced transportation, food and beverage, film and digital media
- Be registered to do business in New Jersey and be able to certify that the company is in good tax standing with the State
- Be in good standing with the Department of Labor and Workforce Development
Applications are now being accepted. Information about the application documents required can be found here. Given how quickly the funds from other NJEDA programs are being depleted, time is of the essence.
If you have questions, please contact us
If you have any questions or if you would like to discuss the matter further, please contact me, Jeff Cassin, or the Scarinci Hollenbeck attorney with whom you work, at 201-896-4100.