A bill that would allow the New Jersey Economic Development Authority to invest in businesses that have been financially harmed by major economic emergencies — such as the COVID-19 pandemic — was approved by an Assembly committee this week.
The bill, co-sponsored by Assemblymen Gary Schaer (D-Passaic) and Andrew Zwicker (D-Monmouth Junction) and Assemblywoman Eliana Pintor Marin (D-Newark), passed through the Commerce and Economic Development Committee on Monday, and now will be considered for a vote by the full Assembly.
Bill A4330 is called the Economic Emergency Investment Stabilization Act, and would create a program — modeled on an EDA pilot — that would let the EDA make direct equity investments into New Jersey-based businesses, purchasing shares in exchange for a minority ownership stake.
“This pandemic hit us early, and it hit us hard — impacting not only the health of our residents, but the strength of our economy,” Schaer said in a prepared statement. “Between necessary business restrictions aimed at containing this virus and a lack of consumer confidence or spending power, our businesses are really struggling right now. We must be able to invest in New Jersey companies during times of crisis to help them make it through to the other side.”
The EDA would create a revolving, self-sustaining fund to utilize in the event of such an emergency — triggered if the governor declares a state of emergency due to a public health crisis or natural disaster that causes a major disruption to the state’s economy, resulting in decreased revenues and increased unemployment.
“Since the first confirmed case (of COVID-19), New Jersey has been fighting to find a balance between public health and economic concerns as we work to contain this virus,” Pintor Marin said in a statement. “We recognized the potentially devastating impact the pandemic has had on businesses throughout the state and have prioritized efforts to help as many as possible. A program like this, that invests in struggling companies in order to help them stabilize and thrive again, will provide a significant tool for us to offer in support of the business community.”
Investments would range from $100,000 to $1 million in qualified applicants, and would be withdrawn in one to 10 years, at a time the EDA determined would be most beneficial to the fund.
“Sometimes circumstances outside of our control present us with nearly insurmountable challenges,” Zwicker said in a statement. “It’s times like these that a helping hand — such as an investment in a business someone has worked hard to build — can go a long way. This program will make a difference in the lives of countless residents whose businesses and jobs could be saved with just a little help.”
The co-sponsors said in a news release that, because of the pandemic, more than 40% of small businesses said they are about to exhaust cash reserves, while 16% already have.