The state just got a few more dollars to lend to small businesses — $10 million more, to be exact.
The New Jersey Economic Development Authority announced Tuesday that it will be able to expand its Small Business Emergency Assistance Loan Program by $10 million, thanks to a grant received from the U.S. Economic Development Administration’s CARES Act appropriation.
The money will allow the New Jersey EDA to create Phase 2 of its loan program — one that will offer up to $100,000 in low-cost financing to eligible New Jersey small businesses and nonprofits to help with recovery and reopening efforts as a result of COVID-19.
The funding can be used to pay rent or mortgage, payroll and/or utilities. It can also be used to purchase inventory, personal protective equipment, furniture, fixtures or equipment. To ensure equity, $3.5 million of the funding will be reserved for businesses in Opportunity Zone-eligible census tracts.
In line with the terms of Phase 1 of the program, which launched in April, Phase 2 loans will have 10-year terms with zero-percent interest for the first five years, then resetting to the EDA’s prevailing floor rate for the remaining five years, with a 3% cap.
To be eligible, small businesses and nonprofit organizations must be in existence and in operation for at least one year prior to the date of application launch, have $5 million or less in annual revenue and a physical commercial location in New Jersey. They also must be able to show a negative impact resulting from the COVID-19 outbreak. Home-based businesses are not eligible.
The EDA said it expects the application for this phase of the program to be available in the fall.
Gov. Phil Murphy said the additional funding will help the state provide more assistance to the small business community.
“Small businesses are the heartbeat of our economy, and it is incumbent upon us to ensure that we secure the funding necessary to help them succeed during these unprecedented and turbulent times,” he said in a statement.
The Small Business Emergency Assistance Loan Program was launched with $10 million in EDA funding. To date, the NJEDA has approved more than $7.5 million in loans. Additional applications are under review.
EDA head Tim Sullivan said the loans can serve many vital purposes.
“The funding announced today will go a long way toward helping small business owners free up capital to move forward, whether that’s by creating jobs, obtaining PPE or one of numerous other steps necessary to reemerge from the pandemic,” he said.
The USEDA announced the grant award at a news conference in Atlantic City.
The EDA is one of six New Jersey entities or communities to share a total of $15.6 million in federal CARES Act grant funding from the federal agency. The other entities are Burlington County, Cooperative Business Assistance Corp., the Jersey City Economic Development Corp., Rutgers University and the South Jersey Economic Development District.