It's been two months since the federal government approved a Hurricane Sandy recovery plan, including $460 million in aid to businesses.
But as the New Jersey Economic Development Authority prepares to launch the second major initiative in that program, officials say it's been harder than expected to get that money out the door.
In a speech last month, Gov. Chris Christie said he was surprised by the slow pace of applications submitted to a $260 million small-business grant program unveiled in May.
Michele Brown said that's been a concern.
"What we're finding is that we have a confluence of a couple different factors," the EDA's chief executive said.
Brown said many would-be applicants are very small businesses that were "so busy trying to get their businesses up and running and open for the holiday season that they simply didn't have time" to fill out a grant form.
Other business owners may be frustrated by the process of dealing with the damage itself, then navigating insurance claims and the U.S. Small Business Administration loan process, she said. Applicants to the state programs are required to first go through the SBA's disaster assistance process, in order to help the EDA determine the company's "unmet need."
The new $100 million initiative, dubbed the Stronger NJ Loan Program, makes qualifying small businesses eligible for up to $500,000 in working capital loans and $5 million for renovation or new construction loans.
While grant programs are preferred to loans, since they don't have to be repaid, the grants given out by EDA are capped at $50,000. The loan program provides much larger awards and offer what Tim Lizura, president and chief operating officer of the EDA, said are "incredible" terms.
The loans come with no interest and no principle payments for up to two years. After that, the interest rate would be pegged to the five-year treasury rate, resetting every 10 years. The current five-year treasury rate is 0.7 percent. Loans would have terms of up to 30 years.
Brown said another strength of the loan program is that it's available to companies seeking to expand their business or relocate to a storm-damaged zone — in limited cases, even if they didn't sustain physical damage themselves.
"We wanted businesses that needed construction money to have sufficient funds to do their project and complete their project and get back on their feet and open for business, or back on their feet with an expanded business, before they have to worry about making payments," Brown said.
Companies must first seek assistance from the SBA before they can be considered for an award, a requirement Phil Kirschner, president of the New Jersey Business and Industry Association, said he's asked state officials to find a way around.
"Certainly it would speed up and increase interest in loans and grants," he said. "Because it is a very good program. It's exactly what we've been asking for."
Either way, the SBA requirement won't be a hurdle much longer. Brown said it only applies while the SBA programs are active; the deadline for economic injury loans is July 31, according to the SBA.
Spokeswoman Kathy Cook said the SBA, too, saw a slow start for its loan applications.
"I was a little concerned about the number of applications, based on the damage," she said. According to Cook, many affected businesses had insurance, and didn't apply to SBA until they knew exactly how much they would get from their insurers.
The expiration of the SBA deadlines this month could lead to an increase in EDA applications later this summer and into the fall. Brown said many companies might be waiting until the peak summer tourism season is over to seek funds for major projects.
"If you're a business who wants to gut the existing facility and start anew, that's not a project you're going to undertake in the middle of your busiest season," she said.
Lizura said the agency wants to be a partner with applicants and work with them to determine the maximum benefits they can provide. For instance, if a company applying for a loan is also eligible for a grant, he said EDA staff will work to award the firm a grant first, thereby diminishing the amount of a loan. He said EDA won't shy from referring applicants to outside assistance, either.
"We don't live in a silo," he said.
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