The state of New Jersey will receive more than $255 million in funding through the federal State Small Business Credit Initiative, the New Jersey Economic Development Authority announced Tuesday.
The EDA will utilize the funding to develop six programs that will provide financial and technical assistance to small and microbusinesses, as well as early-stage, innovation-focused companies, located in New Jersey.
Administered by the U.S. Department of the Treasury, SSBCI is a federal program designed to catalyze lending and investment of private capital into small businesses, particularly those that would not otherwise have access to funding.
SSBCI supports the expansion of businesses owned by Socially and Economically Disadvantaged Individuals, by allocating at least $27.5 million to benefit SEDI-owned businesses statewide.
Gov. Phil Murphy said the funding matches the vision of his stronger and fairer New Jersey economy.
“The COVID-19 pandemic simultaneously showed both the resilience and tenacity of New Jersey’s small business community and the vital importance of getting capital into the hands of small business owners and entrepreneurs who need it most,” he said. “The infusion of federal funding announced today presents our state with a tremendous opportunity to develop innovative programs to propel our economy forward.”
The NJEDA plans to create and launch the following six programs with the SSBCI funding:
- Clean Energy Business Financing program: The $80 million effort will offer loan participations or companion loans to eligible small businesses seeking to finance qualifying clean energy projects that create jobs in New Jersey. As part of New Jersey Green Fund initiatives, this program will provide $1 of SSBCI funding for every $1 of private financing for loans to small businesses to accelerate deployment of clean energy technologies and support green job creation.
- Life Science Investment program: The $60 million effort will invest funds into one or more venture funds to support early-stage New Jersey life science businesses. The NJEDA will use a public Notice of Investment Opportunity process to seek at least one professional venture capital manager to manage the venture funds and contribute matching private capital.
- Blended Capital Fund program: The $50 million effort will co-invest SSBCI funds in an investment vehicle that supports the purchase of eligible loans from Community Development Financial Institutions serving New Jersey, allowing them to do more lending. The program manager, who will be identified through a public NIO process, would be expected to bring in additional private capital, provide technical assistance to CDFIs, and oversee movement of funds and required reporting to NJEDA.
- Recovery Loan Loss Reserve: The $25 million effort will provide CDFIs and Minority Depository Institutions the ability to leverage their resources to support more small businesses. This program will provide participating CDFIs and MDIs a loan guarantee of 50% for all loans that meet the eligibility criteria. CDFIs and MDIs can request an allocation of up to $2.5 million per entity.
- SEDI Seed Fund: The $20 million effort will invest funds into one or more venture funds to support seed and early-stage startups with SEDI owners. The NJEDA will use a public NIO process to identify one or more fund managers to manage the funds and contribute matching private capital.
- Angel Match program: The $20 million effort will match direct investment in early-stage, product-based technology companies on a one-to-one basis. The funding will be in the form of an unsecured convertible note ranging from $100,000 up to $500,000.
Additional details on each of the NJEDA programs will be announced in the coming weeks.
EDA CEO Tim Sullivan said the funding will have great impact.
“Since his very first day in office, Gov. Murphy’s economic development strategy has been centered on connecting entrepreneurs and small business owners with the capital they need to succeed in an equitable and inclusive manner,” he said. “Through a combination of loans and strategic investments, each of the SSBCI-funded programs being developed will help to position New Jersey businesses for long-term growth.”
State Treasurer Elizabeth Maher Muoio agreed.
“Small businesses are the heart of New Jersey’s economy, and during these difficult past few years, NJEDA has shown its ability to deploy funding to small businesses where it is needed efficiently,” she said. “I am confident that the new programs created by NJEDA with this federal funding will make a lasting difference for New Jersey’s small businesses.”