NJEDA Program Offering $100,000 Working Capital Loans To Qualified New Jersey Small Businesses

McCarter & English, LLP

McCarter & English, LLP

The New Jersey Economic Development Authority (“NJEDA”) has recently announced a series of economic relief packages to help small businesses in the state. Earlier last week, NJEDA launched its Small Business Emergency Assistance Grant Program, which was oversubscribed in a few days. On Monday, April 13, 2020, NJEDA will launch its Small Business Emergency Assistance Loan Program (the “SBEAL Program”). It is anticipated that this program will also be oversubscribed. This alert summarizes the eligibility requirements and other key terms of loans under the SBEAL Program.

Snapshot of the SBEAL Program

$10 million (initial wave) program to provide no-to-low-interest capital loans to businesses with less than $5 million in revenue.

Eligibility – General

  • $5 million or less in annual revenue
  • physical commercial location in New Jersey
  • minimum one year in existence
  • must be registered to do business in New Jersey and be in tax good standing
  • minimum global debt service coverage ratio of 1.0 based on the year prior to the declaration of emergency
  • Department of Labor good standing
  • minimum credit score of 600 for at least one guarantor
  • proof of negative impact of emergency (e.g., closure, reduced hours, 20% revenue drop, etc.) on or after March 9, 2020

Cap; Term; Interest Rate

  • up to $100,000
  • 10-year term and amortization
  • 12 months for deferred repayment
  • 0% interest for years 1-5; 1-3% for years 6-10

The loan application can be accessed here.

Supporting Information and Documents

Business owners and potential borrowers are required to complete and submit their application online via the NJEDA portal. Business owners are requested to provide certain information and upload various supporting documents. We recommend that potentially eligible borrowers conduct their own due diligence in advance to obtain the necessary information and assemble relevant supporting documentation to include with their electronic submission. Supporting documentation includes

  • employer identification number (EIN) and the organization’s industry NAICS code
  • formation documents (certificates of incorporation, certificates of formation, bylaws, operating agreements, etc.)
  • tax returns for three consecutive years (or for as many years as appropriate for entities in business less than three years)
  • financial documentation, including income statement, balance sheet and statement of cash flows
  • name of any individual owning 10% or more of the business and such owner’s personal tax returns for three consecutive years (or for as many years as appropriate for entities in business less than three years)
  • schedule of debts (for NJEDA to determine cash flow to service the proposed debt) and a list of real estate collateral (the lack of which is no reason for rejection)
  • documentation for funding of payroll expenses, if identified: payroll reports/ledger
  • documentation for funding of rent expenses, if identified: current lease
  • documentation for funding of mortgage expenses, if identified: most recent statement/bill
  • documentation for funding of utilities expenses, if identified: most recent bill
  • documentation for funding of tax expenses, if identified: most recent municipal statement/bill
  • documentation for funding of inventory expenses, if identified: invoices

Application Window and Website

  • NJEDA portal: http://cv.business.nj.gov
    • opens Monday, April 13, 2020, 9:00 a.m. ET
    • closes Monday, April 20, 2020, 9:00 a.m. ET

[View source.]

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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