NJEDA to Open Small Business Coronavirus Relief Package Applications April 3
The New Jersey Economic Development Authority (NJEDA) is offering micro-, small- and midsize businesses an economic relief package to assist with payroll and working capital challenges stemming from the coronavirus pandemic. Applications open on April 3 at 9 a.m. and close on April 10.
“First and foremost this is a public health crisis but right behind it is an economic crisis as well,” said Tim Sullivan, CEO of NJEDA, on a March 31 webinar. “We know how much pain there is in the economy, particularly the small business part of the economy. We 100 percent get how challenging this is.”
The funding will take a variety of forms, such as grants, no-cost loans, low-cost loans, loans through intermediaries and technical assistance. Taken together with additional private, federal and philanthropic capital, the funding is expected to total around $75 million to $100 million. The external capital is needed in order to scale impact, Sullivan said, where companies may need more capital or less capital.
One of the main goals of the relief package, according to Sullivan, was to offer funding as soon as possible. “We want to get some money on the street as fast as possible, whether that’s through us or partners…” he explained. “We expect we will be oversubscribed,” he added, noting that the application window could close sooner.
The package is a first wave of support, he noted, and meant to complement federal assistance that is already available for small businesses. “The EDA and state programs are designed to be non-conflicting from the federal and Small Business Administration (SBA) programs. We’ll adjust ours as we need to if we can.”
The grant portion, dubbed the Small Business Emergency Assistance Grant Program, consists of a $5 million pool, with grants from $1,000 to $5,000 available to those businesses with up to 10 full-time employees. The capital is strictly to be used for payroll, debt service and keeping current on rent, not for expenses such as construction.
Its Small Business Emergency Assistance Loan Program includes $10 million in working capital loans offering up to $100,000 for businesses with less than $5 million in revenues. Loans will have 10-year terms.
Included in the relief package is a Community Development Finance Institution (CDFI) First Loss Reserve Fund, which is $10 million to help lenders withstand loan defaults; an Emergency Assistance Guarantee Program, which is $10 million allocated to provide 50-percent guarantees on working capital loans and waive fees; and a New Jersey Entrepreneur Support Program, which is a $5 million loan guarantee program for entrepreneurs who may want to take a capital loan. “There’s a broad demand from the young, early businesses,” explains Sullivan.
NJEDA is also including $150,000 for technical assistance contract support for small businesses that may have difficulty accessing any federal and state funding online and may need technical support or “hand holding.”
While the application process is open to all kinds of businesses, the NJEDA will focus on distributing funds to the hardest-hit industries, such as retail, accommodation and food service, or recreation, for example. “We will focus on the industries most exposed and hardest hit, especially on the grant side,” said Sullivan. Grants will be limited, but Sullivan adds, “if you are grant eligible and loan eligible, you should apply for both.”
The funding is only for businesses with a physical commercial location in New Jersey and those that have one to 10 full-time employees. But solopreneurs, or one-person shops, will also have access to the grants. Nonprofits are eligible if they are in those hardest hit industries, but they have to claim that they have had a hardship and impact from the coronavirus.
Seasonal businesses can also apply, but they may not be the first in line for funds, said Sullivan. “We have to focus on those who already had the impact as opposed to those who may be affected.”
Eligible businesses need to be in good standing with the New Jersey Department of Labor. With the deadlines extended for federal and state taxes, applicants do not need to have filed their 2019 taxes. And if a company currently has a line of credit, they can still apply for the loan programs.
Applicants will have to make a “best effort” not to furlough employees or lay off employees from the time that they apply through six months after the end of the declared state of emergency. They will also have to make an effort to rehire those employees who they may have already laid off. According to the NJEDA, any breach of these “best efforts” could result in repayment of the grants.
“The overall goal of what we are trying to do here is stabilization…we don’t know how long it’s going to last,” explained Sullivan. “What we want to do is make sure there are as many resources available for small businesses.” The more businesses that are able to get through this and not lose their lease or lay off their staff, the better position they will be in and the economy will be in, he said.
For more information on the program or to apply for funding, access cv.business.nj.gov.