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Lending assistance UCEDC works to fill a niche for small businesses searching for loans, training

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A storm recovery loan from the UCEDC helped Mary Baker get her computer system operational and pay her staff after Hurricane Sandy devastated her business.
A storm recovery loan from the UCEDC helped Mary Baker get her computer system operational and pay her staff after Hurricane Sandy devastated her business. - ()

For 37 years, the UCEDC has been a resource to the state's small-business community, providing assistance with capital, training and government contracts.

The statewide nonprofit has an array of loan products ranging from $500 to $5 million to help businesses that, for one reason or another, don't qualify for conventional lending.

Maureen Tinen, president of the UCEDC, said more than 75 percent of New Jersey's small businesses employ fewer than 20 people — the group most likely to need financial assistance. And that's not the only statistic that substantiates a need for monetary help in keeping the state's small businesses afloat.

"New Jersey ranks number 30 in the nation in total number of private loans made to small businesses. We don't have a good track record," Tinen said. "And still, survey after survey reports that the overwhelming majority of small businesses are still unable to access financing — and that number has almost doubled since 2008."

The recession was difficult enough for borrowers who could no longer put their homes up for collateral as values dropped, or gain at least some funding through credit cards, she said.

"Enter Hurricane Sandy, and you've exacerbated the problem," Tinen said. "The overwhelming majority of clients coming in are impacted economically, rather than physically."

With tens of thousands of businesses across the state forced to close for a week or more, the hardship became so severe that losing a business altogether was a real possibility, she said. "After the storm, half a dozen or so banks contacted us because they all wanted to do something for the small-business community, but couldn't quite figure out the model that worked for them," Tinen said. Many of those institutions wound up making a contribution to the New Jersey Relief Fund or other such charity, she added.

Investors Bank was among the financial institutions that pitched in. But Investors went a step further, providing a grant to the UCEDC that let the organization create a storm-recovery loan program, allowing small businesses quick access to working capital.

The Storm Recovery Loan program lets small-business owners borrow up to $25,000 at an interest rate of 2 percent for five years. There are no collateral or application requirements, processing fees or pre-payment penalties.

"One of the reasons we partnered with the UCEDC is because they turn these loans around, from beginning to closing, within two weeks," said Kevin Cummings, CEO of Investors Bank. "They're really connected to the small-business community, so they can help get the loans out." The grant total was $500,000, he said.

This isn't the first time the two organizations have worked together. The relationship has been in place for about five years, Cummings said.

With Investors having closed out 2012 with total assets of $12.7 billion — compared with $5.8 billion in 2007 — the bank was in a position to help. Investors also provided financial support to other not-for-profit organizations in New Jersey and the greater metropolitan area, having spent more than $1 million total, Cummings said.

Investors Bank and the UCEDC began talks shortly after the hurricane, and officially started lending in January.

It's important to point out, Tinen said, that although the media's coverage focused heavily on the devastation at the Shore, most of the businesses impacted by Sandy were in other parts of the state. Some of those businesses include a trucking firm in Paterson, whose one truck was flooded; a veterinarian in Fanwood, whose animal hospital lost thousands of dollars in perishable drugs because of an extended power outage; and Baker Tax and Accounting, in Linden, which took a hit both from a loss of power and fierce winds.

Mary Baker launched her tax preparation and accounting business 25 years ago from home, fitting the work around her full-time job. Come 1998, she found herself with 300 clients, so she decided to open her own shop, officially becoming a full-time entrepreneur. Today, she has 1,500 clients.

When Hurricane Sandy hit, Baker lost her external signage from the wind, and her computer system and server from the power outage. She also had two full-time employees and needed to make payroll.

Baker contacted the UCEDC for financial help, having never before looked into the organization's resources for small businesses. She received a $25,000 storm-recovery loan.

"My insurance only gave me $1,200," Baker said. "My sign alone cost $5,000." With the loan, she was able to replace the sign, get her computer system back up and running, and pay her staff.

"Every day, we make loans to small businesses, most of them under $35,000," Tinen said. With the storm-recovery grant from Investors Bank, the UCEDC so far has closed $500,000 in loans, and about 25 to 28 loans, she said. "We have another half-million dollar loans in the pipeline."

Besides loans, the UCEDC offers more than 100 free training programs each year, many in partnership with state agencies, including the New Jersey Economic Development Authority and the state's Small Business Administration, Tinen said.

Thirty of the training programs are dedicated to government procurement contracts. "These programs are what I call 'business financial literacy' — we have everything from QuickBooks to marketing, understanding your financial statement, social media and more," she said.

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