On June 19, the New Jersey Senate Republican caucus sent a letter to Gov. Phil Murphy urging him to release more of the federal Coronavirus Aid, Relief, and Economic Security Act funding to help the state’s struggling business community — including nonprofits and educational institutions.
The need for adequate capital to sustain pandemic-impacted businesses has been an ongoing drumbeat of the New Jersey Chamber of Commerce since the very beginning of the horrible COVID-19 medical crisis.
When businesses began shutting down, federal and state loan and grant programs began to emerge, all with the intention of helping businesses get through the shutdown and emerge ready to start the recovery.
The thinking behind these programs was valid and well-meaning, but the funding for them was inadequate; reports suggest only 25% of requests were funded, and that was before we entered the recovery stage of the pandemic.
Now that the recovery is beginning — and it needs to reopen at a faster pace — what we see is a landscape of many fiscally wounded businesses that are facing an extremely difficult and potentially prolonged recovery characterized by slowly building revenues and rapidly increasing expenses.
If the recovery is to succeed, we need to do all we can to help these business overcome the challenges they face. That can be best done by offering them some form of capital assistance — working capital, term loans, grants or equity are the most obvious options.
But the question is this — if the hundreds of billions of dollars already poured into state and federal loan and grant programs barely satisfied 25% of the need, where will the capital come from to finance businesses in this critical recovery stage?
A business can have the best restart plan ever devised, but if it does not have capital, it cannot survive.
If you question this, just look at what happened to the national and state economies. As a virtual national lockdown went into effect, businesses quickly became starved for cash. Both the U.S. and New Jersey went from a robust economy to devastation in a matter of a few months.
The New Jersey Senate Republicans’ letter reinforces the vital need for businesses to have access to capital. New sources of liquidity need to be identified and converted to funding or the state is destined for an extremely and possibly devastating economic future.
Finding capital needs to be a priority of the Murphy administration and our state Legislature.
The N.J. Chamber has discussed possible solutions to this problem with our state leaders and we stand ready to continue those discussions.
New Jersey is at a critical juncture in its economic recovery, and there is no issue more important than this one. If we do not build our recovery on a foundation of ample capital, our reopening efforts cannot succeed.
Tom Bracken is CEO and president of the New Jersey Chamber of Commerce.