While the goal of Brick City Development Corp. is to leverage financing from a variety of private- and public-sector sources to attract, retain and grow businesses in Newark, an executive with the nonprofit said many companies are still hitting a wall in trying to obtain funds.
"We get approached quite often by companies that want to be in the city, but have been denied access to capital," said Ruben Gomez, senior vice president of business attraction for BCDC. "More often than not, applicants have been declined by a traditional lender or government funding source, so we find that there's still a need for a specific fund to provide assistance to a company and fill that niche for small and medium-sized business retention and attraction."
To facilitate small-business growth in Newark, BCDC and New Jersey Community Capital today launched a $4 million loan fund capitalized by the social investment group at Prudential Financial Inc. According to Gomez, the fund will provide loans up to $400,000 to Newark-based businesses for the purpose of attracting more companies into the city, expanding small-business capacity and spurring real estate development.
Gomez said BCDC already has companies in the pipeline for the funding, including a food manufacturing business looking to acquire equipment and real estate, and a health care company hoping to relocate downtown.
"We're working on the backdrop of a deep need for small businesses in urban areas," said Ommeed Sathe, vice president of social investment for Prudential. "As we see Newark undergoing a large number of big developments, they become the economic driver for opportunities for small businesses, as large corporations have a need for all sorts of support services."
According to Sathe, the social investment arm of Prudential has invested $1.5 billion in small businesses across the country through economic development groups since the 1970s, so the new BCDC Newark Fund is "part of a long tradition."
"We're not really stacked to be a small-business lender, because we're not a bank, but we still want to make the financing available," Sathe said. "We've made loans to NJCC before and knew the two organizations very well and what they do to foster economic development. We know they're actually going to be out in the field looking at job creation and growth in the companies that get these loans and see how able they are to repay them."
Gomez said BCDC will monitor companies awarded funds "weekly, if not daily," to ensure they will be able to pay back the loans and to "help them access other resources — not just capital — if they need to improve."
"We just received certification this year that allows us to go to the market and raise more capital, and that will help us expand this fund in different ways," Gomez said. "We'll be continually forming the kinds of relationships we have with Prudential with other entities to do more of this kind of work. There's still more parts missing to get businesses the funding they need, but this is just part of our effort to build that access to capital."