Many small businesses still need financing to recover from Sandy, so this week, the UCEDC began seeking out businesses that could benefit from the favorable terms of its Storm Recovery Loan: up to $25,000 for five years at 2 percent interest, with no collateral requirements or fees.
For its Storm Recovery Loan program, which UCEDC launched in December, the organization also received grants of $500,000 from Investors Bank and $328,000 from the Hurricane Sandy New Jersey Relief Fund. Those grants enable UCEDC to offer the below-market interest rate of 2 percent; its president, Maureen Tinen, said the rate normally ranges from 6 percent to 10 percent. The Investors grant also funds a reserve for possible loan defaults.
The UCEDC is a 37-year-old nonprofit community development organization that borrows from the Small Business Administration and banks, then lends that money as microloans to small businesses throughout New Jersey.
So far, UCEDC has made about $1 million in loans to 45 businesses, and has 10 more loans in the pipeline. Tinen said she has budgeted for at least $2.5 million in loans, and is making a concerted effort to connect with borrowers who need the program.
To go the word out, UCEDC hired a new staff member, Greer Reinalda, who this week began personally calling on Shore businesses to let them know about these Sandy microloans.
"We are taking the direct approach: we are going right in and talking to the people on the street who have been impacted," Tinen said. Businesses that get a UCEDC loan also can apply for a state grant from the Stronger NJ Business Grant Program of the New Jersey Economic Development Authority. The EDA grants are up to $50,000 for small businesses or nonprofits affected by Sandy.
"We certainly feel that every client eligible for a grant should pursue a grant," Tinen said. "So if you chose to borrow working capital from us, and then you receive a grant, you can spend both or you can pre-pay our loan. But the point is that you have the working capital to move forward."