NJ: NJEDA Announces April 13th – Application Launch Date for Loan Program for Small Businesses impacted by COVID-19

The New Jersey Economic Development Authority (NJEDA) will launch the application for its Small Business Emergency Assistance Loan Program on Monday, April 13, 2020 at 9:00 am. A link to the program application will be posted on the State’s COVID-19 Business Information Hub. To provide business owners the opportunity to prepare to apply for the loan, a .pdf version of the application will become available on Monday, April 6th. The loan program is part of a package of initiatives announced last week to support businesses and workers facing economic hardship due to the outbreak of the novel coronavirus COVID-19.

A copy of the loan application will be available Monday, April 6, 2020, to provide business owners with the opportunity to prepare. Completed applications will be considered on a first come, first serve rolling basis. To see whether you might qualify for this program, use the NJ COVID-19 Business Support Eligibility Wizard.

The Small Business Emergency Assistance Loan program is designed to provide a direct loan of up to $100,000 to NJ-based small businesses and non-profits organizations that have been in existence for at least one-year and has less than $5 million in annual revenue. These businesses much have been negatively impacted by the COVID-19 outbreak (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).

Your organization is eligible for the Small Business Emergency Assistance Loan Program if you…

  • Have a physical commercial location in the State of NJ. Home-based businesses are not eligible for this program. A home-based business is a business operated out of a residential property where commercial activity is not zoned to take place.
  • Have been in existence for at least one year
  • Have less than $5M annual revenue
  • Can show a global debt service coverage ratio of 1.00 (as of December 31st, 2019)
  • Are able to demonstrate negative impact related to COVID-19 on or after March 9th, 2020
  • Are registered to do business in the State of NJ
  • Must certify that the company is in good tax standing with the State
  • Are in good standing with the Department of Labor and Workforce Development, with all decisions of good standing at the discretion of the Commissioner of the Department of Labor and Workforce Development
  • Are able to provide a CEO certification that the firm will make its best-effort to not lay off employees or will re-hire employees as soon as possible
  • Non-profit organizations are eligible for this program; eligible non-profits must have status of 501(c)(3), 501(c)(4), 501(c)(7)

Types of businesses not eligible:

  • Related to gambling or gaming activities
  • Related to the purveyance of “adult” (i.e., pornographic, lewd, prurient, obscene) activities, services, products or materials (including nude or semi-nude performances or the sale of sexual aids or devices)
  • Auction or bankruptcy or fire or “lost-our-lease” or “going-out-of-business” or similar sale
  • Traveling merchant
  • Christmas tree sales or other outdoor storage
  • Any other activity constituting a nuisance
  • Illegal under the laws of the State of New Jersey

This program is structured specifically for entities facing economic challenges due to COVID-19 and provides low-cost and flexible terms, such as:

  • 10-year term and amortization
  • 0% interest rate (years 1-5), NJEDA’s prevailing interest rate floor (capped at 3.0% years 6-10)
  • Deferred repayments for 12 months

There are no fees associated with the Small Business Emergency Loan Program for the first five years of the loan, including application fees, and then standard modification fees will apply.

About Duane Morris:

Duane Morris has created a COVID-19 Strategy Team to help organizations plan, respond to and address this fast-moving situation. Contact your Duane Morris attorney for more information. Prior Alerts on the topic are available on the team’s webpage.

For Further Information:

If you have any questions about this Alert, please contact  Brad A. Molotsky, James Greenberg, Dan Mita or any member of our COVID-19 Strategy Team or the attorney in the firm with whom you are regularly in contact.