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EDA approves loan program with TD Bank

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The New Jersey Economic Development Authority approved a new loan program Tuesday and changed another program's rules to encourage investment in technology companies.

The board had a relatively light agenda for its first meeting of 2013, following a busy 2012 that saw the agency provide $591 million in financing to 222 projects, creating some 4,600 jobs, according to initial estimates.

In new business, the board approved the creation of the "TD Bank New Jersey Advantage Program," in partnership with TD Bank.

Under the pilot program, TD will provide up to $20 million worth of loans and lines of credit to New Jersey-based companies. The EDA will offer subordinate guarantees on those loans, with a total exposure of up to $10 million.

The program is the result of an initiative by TD Bank, which asked EDA to come up with a subordinate guarantee program as opposed to the pari passu model the EDA traditionally has used. The latter model let the EDA share in the collateral used to secure loans if there was a default.

D. Nicholas Miceli, TD's market president for New Jersey, said the deal couldn't have happened without the EDA partnership. He said the goal is to capitalize on increasing confidence in the marketplace by getting more money into the hands of small and mid-sized businesses.

"Banks have certainly had some money available to lend, but the confidence of business owners to go out and expand has been challenged," he said. "And in the last six months we're starting to see that really open up, where they've got a higher confidence level and they're willing to expand, willing to invest more in their businesses. So we're seeing a good strong loan demand."

Miceli said the program also comes at a good time because it could help businesses in need of extra capital due to Hurricane Sandy.

The EDA also moved to help technology firms raise more capital by amending the rules of its Edison Innovation Venture Capital Growth Fund, which provides matching funds for early-stage technology and life sciences companies.

"In its current form, only investments from venture capital funds are considered eligible to meet the one-to-one matching fund requirement," said EDA CEO Michele A. Brown.

Under new rules approved Tuesday, the parameters for matching funds will be expanded to include not just venture capital, but also money from strategic investors, such as nonprofits or larger firms looking to foster innovation. Brown said strategic investors have become more active in those spaces in recent months.

In its lone incentive item Tuesday, the board approved a $2.5 million Business Employment Incentive Program award for Otsuka America Pharmaceutical Inc. to add up to 100 new jobs in New Jersey. The company was given a BEIP grant in 2010 to relocate its headquarters from Rockville, Md., to Princeton.

Now the company is looking to expand and create 100 new jobs, but the firm has yet to decide whether it will do so in Rockville or Princeton.

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