The New Jersey Economic Development Authority (NJEDA) recently announced several new initiatives designed to help New Jersey businesses cope with economic hardships resulting from the COVID-19 pandemic. The initiatives include a grant program for small businesses, a zero-interest loan program for mid-size companies, support for private-sector lenders and Community Development Financial Institutions (CDFIs), and funding for entrepreneurs.
“The outbreak of the novel coronavirus in New Jersey has sent us into uncharted territory, and the economic impacts will be significant and far-reaching, especially on Main Street. The scope and scale of this new challenge requires immediate action to support New Jersey workers and businesses,” Governor Phil Murphy said in a press statement. “The new NJEDA programs announced today are a critical step that will mitigate the economic impacts of this unprecedented challenge and help workers and businesses to weather the storm and come out stronger when things return to normal.”
Economic Assistance for New Jersey Businesses Impacted by COVID-19
According to NJEDA, the new programs will provide more than $75 million of State and private financial support, with the opportunity to grow to more than $100 million if additional philanthropic, State, and federal resources become available. Below is a brief summary of the initiatives:
- Small Business Emergency Assistance Grant Program: A $5 million program that will provide grants up to $5,000 to small businesses in retail, arts, entertainment, recreation, accommodation, food service, and other services – such as repair, maintenance, personal, and laundry services – to stabilize their operations and reduce the need for layoffs or furloughs.
- Small Business Emergency Assistance Loan Program: A $10 million program that will provide working capital loans of up to $100,000 to businesses with less than $5 million in revenues. Loans made through the program will have ten-year terms with zero percent for the first five years, then resetting to the NJEDA’s prevailing floor rate (capped at 3.00%) for the remaining five years.
- Community Development Finance Institution (CDFI) Emergency Loan Loss Reserve Fund: A $10 million capital reserve fund to take a first loss position on CDFI loans that provide low-interest working capital to micro-businesses. This will allow CDFIs to withstand loan defaults due to the outbreak, which will allow them to provide more loans at lower interest rates to microbusinesses affected by the outbreak.
- CDFI Emergency Assistance Grant Program: A $1.25 million program that will provide grants of up to $250,000 to CDFIs to scale operations or reduce interest rates for the duration of the outbreak.
- NJ Entrepreneur Support Program: A $5 million program that will encourage continued capital flows to new companies, largely in the innovation economy, and temporarily support a shaky market by providing 80 percent loan guarantees for working capital loans to entrepreneurs.
- Small Business Emergency Assistance Guarantee Program: A $10 million program that will provide 50 percent guarantees on working capital loans and waive fees on loans made through institutions participating in the NJEDA’s existing Premier Lender or Premier CDFI programs.
- Emergency Technical Assistance Program: A $150,000 program that will support technical assistance to New Jersey-based companies applying for State and U.S. Small Business Administration programs. The organizations contracted will be paid based on SBA application submissions supported by the technical assistance they provide.
If you need assistance in determining which initiatives are right for you and your business, NJEDA has created an NJ COVID-19 Business Support Eligibility Wizard to help businesses determine which initiatives may be available to them. It anticipates that that applications will open this week. These programs are in addition to other available options, whether in New York or via the CARES Act.
In addition, New York City enacted two financial assistance programs to help small NYC businesses weather COVID-19, which you can learn more about at: https://scarincihollenbeck.com/firm-news/covid-19-alerts/covid-19-financial-assistance-programs-for-nyc-businesses/
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.