New Economic Assistance Programs for New Jersey Businesses and Non-Profits Impacted by COVID-19

Last updated March 30, 2020

On March 26, 2020, the New Jersey Economic Development Authority (the “NJEDA”) approved a number of initiatives to support small and midsize businesses, non-profit organizations, and entrepreneurs facing economic difficulty as a result of the COVID-19 outbreak and New Jersey’s March 9, 2020 declared state of emergency. The new initiatives include a grant program for small businesses, a low-interest loan program for small and midsize businesses, financial support for entrepreneurs, resources to provide technical support, and support for private-sector lenders and Community Development Financial Institutions (“CDFIs”). The initiatives are expected to provide support for 3,000 to 5,000 small and midsize New Jersey businesses and are intended to complement the recently announced federal economic recovery programs, including the U.S. Small Business Administration (“SBA”) loan programs.

All of the programs have detailed eligibility requirements. The application process is anticipated to open during the week of March 30. It is expected that completed applications will be considered on a first come, first served rolling basis.

Small Business Emergency Assistance Grant Program

The Small Business Emergency Assistance Grant Program (the “Emergency Grant Program”) focuses on the smallest enterprises in sectors that are among the most adversely affected by the COVID-19 containment measures. The Emergency Grant Program will provide grants of up to $5,000 to New Jersey-based small and medium sized businesses and non-profits in retail, the arts, entertainment, recreation, accommodation, food service, and certain other service businesses (such as repair, maintenance, personal services, and laundry services), to help stabilize their operations and reduce the need for reductions in workforce. Grant funding is targeted for unrestricted payroll and working capital support and cannot be used for any capital expenses, including construction. Grant amounts will be calculated at $1,000 per full time equivalent employee (“FTE”) as reported on the WR-30 filed by the business entity with the New Jersey Department of Labor and Workforce Development. Eligible applicants will have between 1 and 10 FTEs. The minimum grant amount per application is $1,000, and the maximum grant amount per application is $5,000. Funding for the Emergency Grant Program is $5 million, of which $3 million will be set aside for eligible applicants with 5 or fewer FTEs. It is anticipated that funding under this program will be disbursed as quickly as possible upon approval of a grant application.

Small Business Emergency Assistance Loan Program

The Small Business Emergency Assistance Loan Program (the “Emergency Loan Program”) will provide zero-interest or low-interest working capital loans of up to $100,000 to NJ-based small businesses and non-profits to help cover operating expenses and ensure continuity of operations during the COVID-19 outbreak. Eligible entities must have been in existence for at least 1 year, have less than $5 million in annual revenue, and have been negatively impacted by the COVID-19 outbreak (including, but not limited to, such adverse impacts as a reduction in business hours, complete closure of the business, at least a 20% decline in revenue, employees being unable to work, being required to close by governmental order, or disruption of the supply chain). The Emergency Loan Program will provide direct loans on flexible terms, structured specifically for entities facing economic challenges due to COVID-19. Funding for the Emergency Loan Program is $10 million.

NJ Entrepreneur Support Program (also referred to as the Entrepreneurship Guarantee Program)

The purpose of the NJ Entrepreneur Support Program, also referred to as the Entrepreneurship Guarantee Program, is to encourage continued investment in New Jersey’s innovation sector businesses by incentivizing private sector investors to provide additional working capital loans to NJ-based entrepreneurial businesses in which the investor is already an equity holder. Pursuant to this program, the NJEDA will guarantee up to 80% of an investor loan advanced for working capital purposes to an entrepreneurial business that has been impacted by COVID-19, up to a cap of $200,000 per entrepreneurial business. The investment in the business must have been made after the date of the declared state of emergency (March 9, 2020). Funding for this program is $5 million.

Small Business Emergency Assistance Guarantee Program

Through the Small Business Emergency Assistance Guarantee Program (the “Emergency Guarantee Program”), the NJEDA will provide short-term 50% guarantees (first loss position) of working capital loans and lines of credit originated by the NJEDA’s Premier Lender banks (not to exceed a total exposure of $100,000 to Premier Lenders), to cover operating expenses and support business continuity for New Jersey small businesses and non-profit organizations that have experienced a range of COVID-19 related impacts to businesses (including but not limited to reduced revenue, employee shortages, supply chain impacts, etc.). Funding for the Emergency Guarantee Program is $10 million.

Emergency Technical Assistance Program – Assistance with NJEDA and SBA Applications

New Jersey-based businesses applying to New Jersey economic assistance programs and/or U.S. SBA economic assistance programs will be able to apply for technical assistance from the Emergency Technical Assistance Program. Funding for this program will be used by the NJEDA to contract with third-party organizations to provide application assistance to businesses, including, but not limited to, preparing financial information, packaging application documentation, and completing and submitting the on-line or paper-based application.

NJEDA Partnering with Community Development Finance Institutions (CDFIs)

In partnership with NJ-based Community Development Finance Institutions (CDFIs), the NJEDA has developed two programs to provide additional lending capacity to NJ-based micro and small business owners impacted by COVID-19 that may have difficulty securing traditional bank financing. CDFIs are certified by the Community Development Financial Institutions Fund of the U.S. Department of Treasury and provide financial services to underserved communities, populations, and business sectors.

CDFI Emergency Loan Loss Reserve Fund Program. This is a $10 million capital reserve fund to provide loan guarantees (first loss position) for CDFI loans that provide low-interest working capital to small and micro businesses directly impacted by COVID-19 after the date of the declared state of emergency. This program will enable CDFIs to withstand loan defaults due to the COVID-19 outbreak, which will allow them to provide more loans at lower interest rates to more NJ-based small and micro businesses affected by the outbreak.

CDFI Emergency Assistance Grant Program. The NJEDA will provide each NJ-based CDFI up to $250,000 of grant funding to help scale-up origination, technical support, and underwriting capacity and to enable CDFIs to reduce interest rates on COVID-19 related emergency working capital loans.

Additional Information

It is anticipated that during the week of March 30 and thereafter, more information will become available about the application process for each NJEDA Emergency Assistance Program described in this alert.

The disaster relief loan programs being administered by the U.S. SBA are discussed in two prior alerts by CSG.

If you have any questions about the NJEDA Emergency Assistance Programs or the U.S. SBA loan programs, please reach out to your CSG attorney.

For additional information pertaining to the coronavirus outbreak, please visit CSG’s COVID-19 Resource Center.

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