Non-essential retail businesses were shut down by Executive Order No. 107 on March 21, 2020. This order also made New Jersey among the first states to implement a shelter in place order for all residents. Unique among other states in the region, New Jersey lacks a formal process for businesses to apply for a waiver or exemption. On April 10, 2020, Governor Murphy extended the shut-down to non-essential construction projects and implemented new restrictions on essential retail businesses.
To help New Jersey businesses during these challenging times, the New Jersey Economic Development Authority (NJEDA) has established several funding programs for businesses struggling with the impact of COVID-19. First announced in late March, funds available under these programs are rapidly depleting due to overwhelming demand, and deadlines are being adjusted on a nearly daily basis. New Jersey has suggested more funding may be sought in the future and encourages eligible businesses to apply as quickly as possible. We have summarized a number of these programs below, and more information is available at New Jersey’s COVID-19 Business Hub.
Emergency Assistance Grant Program
The Emergency Assistance Grant Program launched on April 3, 2020 and reached oversubscription within one hour. Over 30,000 applications were received in the first week alone. The program offers $5,000 grants for businesses with the goal of stabilizing operations and reducing the need for layoffs. The NJEDA is now accepting donations in order to secure additional funding.
Emergency Assistance Loan Program
With $10 million in funding, the program offers up to $100,000 for businesses with less than $5 million in revenue. Loans have ten-year terms with 0% interest for the first five years, with NJEDA’s prevailing floor rate (capped at 3.00%) for the remaining five years. Eligible businesses must show global debt service coverage ratio of 1.00, a negative impact from COVID-19, be registered to do in business in New Jersey, and be in existence for at least one year. The application window was originally scheduled to run until April 20, 2020, but was shortened to close on April 16, 2020.
Emergency Assistance Guarantee Program
This $10 million program provides 50% guarantees on working capital loans. It also waives fees on loans made through institutions participating in the NJEDA’s existing Premier Lender or Premier CDFI programs.
NJ Entrepreneur Support Program
With $5 million in funding, the program seeks to encourage continued capital flows to new companies and provide support through 80% loan guarantees for working capital loans to entrepreneurs.
Community Development Finance Institution (CDFI) Emergency Loan Loss Reserve Fund
Essentially a $10 million capital reserve fund established to absorb a first loss position on CDFI loans offering low-interest working capital to micro-businesses. This goal is to allow CDFIs to withstand loan defaults due to the COVID-19 outbreak. This funding may permit CDFIs to provide more loans at lower interest rates to microbusinesses affected by the outbreak.
CDFI Emergency Assistance Grant Program
This $1.25 million program offers grants of up to $250,000 to CDFIs to increase operations or reduce interest rates for the duration of the COVID-19 outbreak.
Financial Relief on Existing NJEDA Obligations
The NJEDA Board has approved a 3-month payment moratorium for eligible businesses on certain loans. The NJEDA is also waiving certain specific requirements related to employee presence in the office for employment-based incentive programs including the Grow New Jersey Program, the Urban Transit Hub Program, the Business Employment Incentive Program and the Business Retention and Relocation Assistance Grant Program.
The SBA Focus Group of the COVID-19 Task Force at Klehr Harrison stands ready to assist you in your business and legal needs. We will continue to provide additional information and guidance as these programs are implemented.
Co-author Patrick McKnight is an associate in the Litigation Department and co-author Matthew McDonald is a partner in the Corporate & Securities Department at Klehr Harrison.