A $40 million aid package approved by the state’s Economic Development Authority on Thursday will provide grant and loans or guarantee private bank loans to small businesses rocked by the coronavirus pandemic.
The consequences of the coronavirus have been crippling for New Jersey businesses, many of which were deemed nonessential and ordered to close or drastically curtail their services.
"The outbreak of the novel coronavirus in New Jersey has sent us into uncharted territory, and the economic impacts will be significant and far-reaching, especially on Main Street,” Gov. Phil Murphy said in a statement. “The scope and scale of this new challenge requires immediate action to support New Jersey workers and businesses.”
Tim Sullivan, who heads the authority, said while this initial aid will just scratch the surface of the need created by the economic crisis, the EDA tried to create easily-accessible programs that can readily be expanded if more funding opens up.
“The real emphasis here has got to be stabilization,” to ensure businesses can survive through indefinite closures, pay their rent, pay their loans and keep their workforce employed, Sullivan told NJ Advance Media.
More than 155,000 people filed unemployment claims last week, according to new data from the state Department of Labor and Workforce development that provides a first glimpse of the economic toll.
The state loans and grants are aimed at the state’s smallest businesses, which operate on the thinnest margins, have little reserves and are hardest hit, Sullivan said.
A National Federation of Small Business survey of companies with between one and 360 employees released Monday found three-quarters were feeling some pain, with more than half of those reporting slowing sales. It also found many were already scrambling for help, whether through their bank or the Small Business Administration.
State officials said they intend the Economic Development Authority to deploy its aid quickly, as businesses are still awaiting details on federal stimulus programs.
The EDA package includes a half dozen programs for New-Jersey based businesses feeling the effects of the coronavirus economic crisis.
The smallest businesses, those 10 or fewer full-time equivalent employees, can receive grants between $1,000 and $5,000. The grants specifically target companies in retail, personal-care, entertainment, recreation, accommodation, food service, laundry and repair services.
In order to receive money, businesses will have to attest that they need this money to tide them over and won’t cut any employees or will make every effort to rehire laid off or furloughed staff.
The program is capped at $5 million, which will support between 1,250 and 2,000 grants, though officials said they expect demand will be much higher. Applications could be available by the end of next week.
The EDA also has set aside $10 million to make loans up to $100,000 each to mid-sized businesses with less than $5 million in annual revenues to help them meet payroll. The 10-year loans would have zero interest for the first five years and the interest rate would be capped at 3 percent for the second half of the loan.
Two more programs, $15 million in total, will be run through community development financial institutions to make available low-interest loans to small businesses that may not be able to tap into traditional bank borrowing.
The NJ Entrepreneur Support Program targets start-ups with less than $5 million in revenue and fewer than 25 employees by providing 80 percent loan guarantees to entrepreneurs.
Michele Siekerka, president of the New Jersey Business & Industry Association, said that while “much more” help will be needed from both the state and federal government, “these EDA programs and their immediacy will be of significant help.”
“Throughout this health crisis, we have fielded hundreds of calls and emails from New Jersey business owners unable to meet payroll and pay their bills because they have little to no revenue coming in and little reserves,” she said in a statement. “By and large, they are desperate to stay afloat and devastated to have made difficult staff decisions.”
Her organization has urged business owners to gather all their financial anticipation now so they’ll be ready to deploy when the applications become available.
“Don’t wait,” she implored them. “Get ready now.”
Samantha Marcus may be reached at smarcus@njadvancemedia.com. Follow her on Twitter@samanthamarcus. Find NJ.com Politics on Facebook.
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