New Jersey Economic Development Authority COVID-19 Relief Programs

On March 26, 2020, the Board of the New Jersey Economic Development Authority (“NJEDA”) met and approved several new loan, grant, and financing programs to benefit New Jersey businesses. In total, the initial package of programs will provide more than $40 million to small and medium sized businesses in New Jersey as relief from the challenges posed by the COVID-19 pandemic.

The NJEDA Executive Staff indicated that each of the programs summarized below was designed to expand and continue on a rolling basis as additional funding becomes available.

The Small Business Emergency Assistance Grant Program – $5 million

  • This is a grant – not a loan – so no repayment required
  • Grant amounts will be between $1000-5000 per business
  • Business must have a physical commercial location in New Jersey (home-based businesses are not eligible at this time)
  • Limited to businesses with between 1-10 full time equivalent employees reported on the WR-30 filed with the New Jersey Department of Labor and Workforce Development (includes non-profits with 501(c)(3), (c)(4), and (c)(7) status that meet the required criteria)
  • Business must be registered to do business in New Jersey, be in good tax standing with the State, and be in good standing with the Department of Labor and Workforce Development
  • Business must be within specified NAICS code classifications, including retail, accommodation and food service, entertainment and recreation, or defined “other services” (NAICS codes beginning 811 or 812)
  • CEO must certify that the business:
    • Will make a best effort not to lay off or furlough employees from the time of application through six months after state of emergency is lifted. If business has already laid off or furloughed, the business will make a best effort to re-hire those workers as soon as possible
    • Has been negatively impacted by COVID-19 state of emergency, i.e., shutting down, reducing hours, having at least 20% drop in revenue, materially impacted by employees not being able to work due to the outbreak, or supply chain materially disrupted; and
    • Has a financial need that it cannot overcome without emergency relief
  • Applications expected to be available beginning the week of March 30 and will be considered on a first come, first serve basis. No application fees.

Small Business Emergency Assistance Loan Program – $10 million

  • Direct loans to small businesses of up to $100,000
  • Specifications:
    • 10-year term and amortization
    • 0% interest for years 1-5, and NJEDA prevailing interest rate floor for years 6-10 (capped at 3.0%)
    • Deferred payments for 12 months; and
    • No fees for five years (including no application fee) and standard modification fees apply thereafter
  • Conditions:
    • Business must have existed for at least one year, have a physical commercial location in New Jersey, and have less than $5 million in annual revenue
    • Business must have been negatively impacted by COVID-19 state of emergency
    • Business must be registered to do business in New Jersey, be in good tax standing with the State, and be in good standing with the Department of Labor and Workforce Development
    • CEO to certify that best effort will be made not to lay off or furlough employees or that those already impacted will be rehired as soon as possible
    • Business can show global debt service coverage ratio of 1.00 as of December 31, 2019; and
    • Certain businesses not eligible, including those related to: gambling or gaming, adult activities, outdoor storage, and activities that are illegal or constitute a nuisance
  • Applications expected to be available beginning the week of March 30 and will be considered on a first come, first serve basis. No application fees.

Small Business Emergency Assistance Guarantee Program – $10 million

  • Guarantees up to 50% of permanent working capital loans and lines of credit originated by designated “Premier Lender” banks
  • Guarantee not to exceed $100,000
  • Loans must be made to cover operating expenses for New Jersey small businesses and non-profit organizations that have been negatively impacted by COVID-19:
    • Business must have existed for at least one year, have a physical commercial location in New Jersey, and have less than $5 million in annual revenue
    • Business must have been negatively impacted by COVID-19 state of emergency
    • Business must be registered to do business in New Jersey, and must be in good tax standing with the State and in good standing with the Department of Labor and Workforce Development
    • CEO to certify that best effort will be made not to lay off or furlough employees or that will be rehired as soon as possible
    • Certain businesses not eligible, including those related to: gambling or gaming, adult activities, outdoor storage, and activities that are illegal or constitute a nuisance

Community Development Finance Institutions (“CDFI”) Programs:

  • CDFI Emergency Assistance Grant Program – $1.25 million
    • Up to $250,000 to qualified CDFI to provide assistance to micro and small businesses impacted by COVID-19 to:
      • Support scaling up of CDFIs to handle more business applications; and
      • Allow CDFIs to buy down interest rates on emergency working capital loans related to COVID-19 relief
  • CDFI Emergency Loan Loss Reserve Fund – $10 million
    • Provides loan guarantees to CDFIs for working capital loans to businesses
    • Applies to loans up to $75,000 for working capital needs of micro or small business
    • Interest rate on loan must be less than 3.75%
    • Loan must provide flexible structure, e.g., deferred payments, moratoriums, or interest only for up to six months; and
    • Business must certify to COVID-19 negative impact

NJ Entrepreneurship Guarantee Program – $5 million

  • Guarantees 80% of investor loans (up to $200,000) advanced for working capital to entrepreneurial companies impacted by COVID-19
  • Loans must be made on or after March 9, 2020
  • $200,000 can be spread amongst multiple lenders – limit applies to aggregate of applicable loans made to single entrepreneurial entity
  • Entrepreneurial business must:
    • Have minimum of 50% employees in New Jersey
    • Have fewer than 25 total employees at time of application
    • Have under $5 million in revenue
    • Have corporate headquarters in New Jersey (at least one C suite member with principal office in NJ)
    • Be in one of eight defined sectors outlined in Governor Murphy’s economic plan; and
    • Be registered to do business in New Jersey, be in good tax standing with the State, and be in good standing with the Department of Labor and Workforce Development
  • Investor requirements:
    • Must have already have equity interest and equity position in the business
    • Can be individuals, trusts, corporations, and other entities; and
    • Are not required to be New Jersey residents

Relief for Businesses With Existing NJEDA Loans

  • Payment moratorium for 3 months for businesses with existing NJEDA direct loans or loans with Premier Lender participation
  • Additional payment deferments for an additional 3-6 months available on a case-by-case basis
  • Collateral releases, subordinations, and substitutions on business assets
  • Waiver of late fees on loan repayments and loan modifications
  • To qualify, business must:
    • Be able to demonstrate negative impact related to COVID-19 on or after March 9, 2020
    • Not have active litigation with NJEDA; and
    • Not have been delinquent on existing loan for 120 days
  • Business should contact its NJEDA Servicing Officer for more information

If you have any questions, please contact John N. Visconi at 201.857.6762, or contact the Stevens & Lee attorney with whom you regularly work.

©2020 Stevens & Lee, a Pennsylvania Professional Corporation. Richard J. Pinto, attorney responsible for the New Jersey office.

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