Samm Sound didn't suffer physical damage as a result of Hurricane Sandy, but that didn't mean the 40-year-old West Caldwell company was unaffected.
The company lost about two weeks of business, said co-owner Al DiMeo, because instead of shopping for sound systems — which the company installs in offices, homes and autos — potential customers were suffering through power outages and sitting on gas lines.
To help it rebound, Samm Sound sought and received a working capital loan from UCEDC, a nonprofit economic development organization and one of several lenders statewide that created new loan programs targeted for businesses harmed by Sandy.
DiMeo said he got UCEDC's maximum Sandy loan: $25,000 for five years, at 2 percent interest — "a nice shot in the arm."
"Any time you can borrow money at a reduced rate like that, you take advantage of it," said DiMeo, who owns business with his brother, Victor. "I wish I could borrow more — it worked out very well."
Nine months after Sandy wreaked billions of dollars in damage in New Jersey, many businesses are still assessing and repairing the damage — and lenders say they're eager to help, putting more Sandy loans on the street in hope that more borrowers like DiMeo come forward.
Many businesses have been slow to borrow money after the storm, even at the favorable terms offered, to avoid the risk of taking on debt. But community-based lenders say the tide is due to change as business owners get a better idea how much of their recovery expenses won't be covered by insurance payments or government grants.
Commercial banks statewide urged businesses to turn to them for financing in the days after Sandy, including JP Morgan Chase, which earmarked $5 billion in additional lending for small and midsized businesses harmed by Sandy in New Jersey and New York.
Chase business banker Shanti Musacchia said the lender made a number of "bullet loans" to businesses hurt by Sandy. These are short-term loans with no payment until the loan comes due, usually in three to six months.
Although unable to estimate how much Sandy-related lending Chase did, "we saw a lot of loan volume," Musacchia said. "There were definitely companies out there that needed to borrow money during that period of time."
The Economic Development Authority launched the newest, and one of the most generous, Sandy loan programs last month. The Stronger NJ Business Loan program has $100 million for loans of up to $5 million, with no interest for the first two years. The EDA said it is reviewing 100 loan applications.
The nonprofit community lender New Jersey Community Capital raised about $5 million to launch a low-cost Sandy loan program a month after the storm; funds came from a dozen banks, corporations and nonprofits, including Chase, Bank of America, TD Bank, Wells Fargo, Goldman Sachs, CitiGroup and New Jersey Natural Gas.
Marie Mascherin, its chief lending officer, said NJCC has so far made about 30 loans totaling $1 million.
"We expected to be inundated with applications, and that didn't happen," she said.
But as time passes, activity is picking up. She said business owners initially spent their own cash reserves or borrowed against credit cards to make repairs and stabilize their companies. "Now, they need our help," Mascherin said. "There was a bit of a time delay."
NJCC is making Sandy loans of up to $65,000, with no interest for the first three months and 3 percent for the next three years. And, if a borrower needs more, NJCC will consider doing the deal through its regular community lending portfolio. NJCC just approved a $200,000 loan to replace the roof on a Jersey Shore charter school.
"I don't think demand is decreasing at all — we're getting between four and 10 calls a week," said Daniel Arndt, lending officer for NJCC. Arndt said in April, NJCC received an allocation of $30 million in federal New Markets tax credits, and plans to use about half that to fund larger projects in the nine New Jersey counties hardest hit by Sandy.
"We want to create jobs, get the wheels moving again and try to focus on shovel-ready projects that are ready to go and just need that extra push from an affordable financing source," Arndt said.
The Intersect Fund, a New Brunswick-based nonprofit lender, is making Sandy loans of up to $15,000 for up to 3 years at 5 percent interest; so far, it's lent about $400,000 to 40 business.
Rohan Mathew, president, thinks Intersect eventually could lend $1 million to businesses hurt by Sandy.
"There is still a need," Mathew said. "If you go to areas that were really impacted by the storm, you will see that the rebuilding process is still very much underway."
Intersect is funding the program with grants from Capital One, the Robin Hood Foundation and the Hurricane Sandy New Jersey Relief Fund. Borrowers also get a grant equal to 15 percent of their loan.
In June, Mathew said, Intersect hired two full-time staffers, funded by the federal AmeriCorps Vista program, to get the word out about their loan program: "They are each making about 100 cold calls a day, going door to door to businesses and bringing in applications."
Maureen Tinen, president of UCEDC, also hired a new staffer in June to help spread the word about the Sandy loans, and she hopes to at least double the nearly $1 million in Sandy loans UCEDC has made so far. The program is funded in part by grants from Investors Bank and the Hurricane Sandy New Jersey Relief Fund.
She said a number of businesses are holding off on borrowing until they find out if they qualify for the federal grants, worth as much as $50,000, being administered by the state EDA. According to the agency, so far, 16 businesses have so far received grants totaling more than $625,000.
"The criteria is really stringent," for the grants, Tinen said. So for those businesses that don't qualify, "our loan product will be an alternative for them."
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