The New Jersey Economic Development Authority wants to give small businesses a boost through a newly created loan program that’s part of the economic master plan for the state which Gov. Phil Murphy unveiled on Oct. 1.
Under a 12-month pilot version of the Access Program approved at the EDA’s October board meeting, the agency will set aside $15 million that small businesses can borrow to handle the costs of overhead and scaling their operations.
“Small businesses are the backbone of our economy and employ more than 50 percent of our workforce, so helping businesses that may have been left behind previously get capital to grow their businesses and create jobs is essential to economic growth and improving New Jersey’s business climate,” Murphy said in a written statement.
Under the program’s Premier Lending Partner component, the EDA will guarantee loans with at least one of 26 banking partners. The program would set aside $10 million for the program, capped at $1.5 million for any single borrower.
The second program, the $5 million Direct Loans program, is money directly from the EDA, with a cap of $750,000 per borrower.
Up to $500,000 will be available to cover fixed assets, which is long-term property such as land, buildings and equipment. Up to $250,000 will be available to cover working capital.
“I think it will be better and more tailored to the marketplace,” EDA CEO TIm Sullivan said at the Thursday board meeting. “Small businesses continue to struggle with access to capital, particularly women, minority and veteran-owned businesses.”
Under the new program, the EDA will require that businesses are in operation for at least two years, and have an average historical and global debt service of at least 1.25x over the past two years.
The FICO score must by at least 700 for 50 percent of the personal guarantors at the business.