The New Jersey Economic Development Authority announced on Tuesday it has approved three Community Development Financial Institutions, or CDFIs, to participate in its Premier CDFI Program.
The three CDFIs are: Union County Economic Development Corp., Cooperative Business Assistance Corp., and New Jersey Community Capital. They will all have access to EDA participations and guarantees to support loans to small businesses. The trio was also approved for $1.5 million loans through the CDFI Loan to Lenders Program.
“CDFIs are crucial partners in our work to build a stronger, fairer New Jersey economy and are particularly important now as business owners struggle to overcome the economic impacts of COVID-19,” NJEDA CEO Tim Sullivan said. “We are proud to partner with three leading CDFIs to launch the Premier CDFI Program and look forward to working with these organizations to help businesses recover from COVID-19 and build a more equitable, inclusive New Jersey economy.”
CDFIs are financial institutions that been been certified by the Community Development Financial Institutions Fund at the U.S. Department of Treasury to provide credit and financial services to underserved communities. To get the designation, a financial institution must use 60% of its financing activities for low- and moderate-income populations or underserved communities.
“CDFIs are vital players in New Jersey’s economy that provide financing to businesses and organizations that are too small to qualify for traditional bank financing,” UCEDC President Adam Farrah said. “At a time when so many businesses are suffering and multiple studies have shown small minority- and women-owned businesses are at particular risk, working with the NJEDA to expand our capacity to provide accessible, low-cost financing will be vital to protecting New Jersey’s economy and laying the foundation for recovery.”
The Premier CDFI Program allows participating firms to make direct loans of up to $500,000 to qualified small businesses. To access it, CDFI’s must first apply to the EDA for an evaluation of their lending history and portfolio management.
“Under the best of circumstances, business owners in underserved communities face challenges accessing capital. COVID-19 has only made that already challenging situation worse. As the pandemic continues, CDFIs are going to play a key role in helping small businesses survive and adapt to the ‘new normal,’” NJCC President Wayne Meyer said. “The NJEDA’s partnership and support will be critical to our efforts to provide the resources businesses need to keep paying their employees and preparing new systems that are sustainable over the long term.”