NJ Offers Emergency Funding for Small Businesses and Nonprofits

Beginning April 3, 2020, applications will open for both the federal SBA coronavirus relief funds and a program for New Jersey businesses being administered by the New Jersey Economic Development Authority.

The NJEDA has launched a Small Business Emergency Assistance Grant program together with a Small Business Emergency Assistance Loan program. Both of the grant and the loan program are designed to supplement the federal economic relief package but are limited only to New Jersey businesses.

To see whether you might qualify for these programs (and the SBA Disaster Relief program), use the NJ COVID-19 Business Support Eligibility Wizard.

Small Business Emergency Assistance Grant Program

The Small Business Emergency Assistance Grant program provides up to $5,000 to New Jersey-based small businesses and nonprofits. The grant funding is targeted as unrestricted payroll and working capital support and cannot be used for any capital expenses, including construction. Small businesses will be entitled to receive a grant of up to $1,000 per full-time employee (FTE) with a $5,000 cap.

A business is eligible for the grant program if:

• It has between 1-10 FTE. Holding companies, 1099 employees and larger firms are not eligible for this round of grant funding.
• It has a physical commercial location in the State of New Jersey. Home-based businesses are not eligible for this round of grant funding.
• It is classified in one of the following industries: Retail (NAICS codes starting with 44 or 45); Accommodation & food services (NAICS codes starting with 72); Arts, entertainment & recreation (NAICS codes starting with 71); Other services (only those with NAICS codes starting with 811 and 812). You can look up your NAICS code at naics.com/search
• It is registered to do business in the State of New Jersey.
• It can certify that the company is in good tax standing with the State
• It is in good standing with the Department of Labor and Workforce Development.
• The CEO of the business certifies that the business:
  • Will rehire those workers as soon as possible. Any material breach of its best-efforts certification may result in the NJEDA seeking repayment of the grant.
  • Has been negatively impacted by the COVID-19 declared state of emergency in Executive Order 103 (e.g., has been temporarily shut down, has been required to reduce hours, has had at least a 20% drop in revenue, has been materially impacted by employees who cannot work due to the outbreak, or has a supply chain that has materially been disrupted and therefore slowed production).
  • Has a material financial need that cannot be overcome without the grant of emergency relief funds at this time (e.g., does not have significant cash reserves that can support the business during this period of economic disruption)

Also, non-profit organizations are eligible for this program. Eligible nonprofits must have a status of 501(c)(3), 501(c)(4) or 501(c)(7).

The following businesses are ineligible:

• Gambling or gaming activities
• Businesses related to the purveyance of “adult” activities, services, products or materials
• Businesses conducting auction or bankruptcy or “going-out-of-business” or similar sale
• Traveling merchants
• Christmas tree sales or other outdoor storage
• Any other activity constituting a nuisance
• Illegal under the laws of the State of New Jersey

Small Business Emergency Assistance Loan Program

The Small Business Emergency Assistance Loan program is a $10 million program that will make direct, low-cost financing available to allow New Jersey small businesses and nonprofits to cover operating expenses during the outbreak.

The program is designed to provide a direct loan of up to $100,000 to New Jersey small businesses and nonprofits that have been in existence for at least one-year and have less than $5 million in annual revenue.

A business is eligible for the loan program if:

• It has a physical commercial location in the State of New Jersey. Home-based businesses are not eligible for this program.
• It has been in existence for at least one year.
• It has less than $5 million in annual revenue.
• It can show a global debt service coverage ratio of 1.00 (as of December 31st, 2019).
• It is able to demonstrate negative impact related to COVID-19 on or after March 9th, 2020 (including, but not limited to: reduction of business hours, complete closure of business, at least a 20% decline in revenue, employees unable to work, required to close by government, or disruption of supply chain).
• It is registered to do business in the State of New Jersey.
• It certifies that the company is in good tax standing with the State.
• It is in good standing with the Department of Labor and Workforce Development.
• A CEO certifies that the firm will make its best efforts not to lay off employees or will rehire employees as soon as possible.

The same nonprofits that qualify for the grant program likewise qualify for the loan program. In addition, similar businesses that are not eligible under the grant program are likewise not eligible under the loan program.

The loan program offers low costs and flexible terms, such as 10-year term and amortization, 0% interest rate for years 1-5 and deferred repayments for 12 months.

Completed applications will be considered on a first come, first served rolling basis. Please see the link to the NJEDA’s presentation  which sets forth both programs in more detail together with information on other available programs. The presentation also includes copies of the application you can review to ensure you have all the required information needed to apply. You can file an application here.

We encourage you to review the sample application and prepare all necessary documentation so that you can file quickly. If you need assistance in preparing the application, do not hesitate to contact us.