June 10 2021 0Comment

What is the status of the Small Business Emergency Assistance Loan Program? (Phase 2)

Source: NJEDA.com

The pre-registration and application for the Small Business Emergency Assistance Loan Program (Phase 2) are currently under development. The pre-registration is expected to be available in July 2021.

The Small Business Emergency Assistance Loan Program provides direct low-cost financing of up to $100,000 to New Jersey-based businesses and nonprofits that have been negatively impacted by the COVID-19 pandemic.

Eligibility:

All businesses and nonprofits must meet the following baseline eligibility requirements:

  • A physical commercial location in the State of New Jersey.
  • In existence by the date of application launch.
  • $10 million or less in annual revenue.
  • Registered to do business in the State of New Jersey at time of application.
  • No tax debts due to the State.
  • In good standing with the Department of Labor and Workforce Development, with all decisions of good standing at the discretion of the Commissioner of the Department of Labor and Workforce Development.

Businesses that meet these baseline eligibility requirements will be sorted into Stage 1 and Stage 2 applicants.

  • Stage1 applicants must have acquired at least 500 square feet of additional space by executing a new lease, leasing additional space, or acquiring an owner-occupied commercial space on or after January 1, 2021.
  • Stage2 applicants are those that do not meet the new lease, additional leased space or acquired owner-occupied commercial space criteria. Stage 2 applicants that meet the baseline eligibility requirements above ARE eligible for financing.

The following types of businesses ARE NOT eligible: 

  • Home-based businesses. A home-based business is a business operated out of a residential property not zoned for commercial activity.
  • Real estate holding companies.
  • Businesses related to gambling or gaming activities.
  • Businesses related to the purveyance of “adult” (i.e., pornographic, lewd, prurient, obscene) activities, services, products, or materials (including nude or semi-nude performances or the sale of sexual aids or devices).
  • Auction or bankruptcy or fire or “lost-our-lease” or “going-out-of-business” or similar sales.
  • Traveling merchants.
  • Christmas tree sales or other outdoor storage.
  • Any other activity constituting a nuisance.
  • Businesses that are illegal under the laws of the State of New Jersey.

Available Funding and Eligible Funding Uses:

Businesses and nonprofits may apply for loans of up to $100,000.

The State has allocated a total of $10 million for the Small Business Emergency Assistance Loan Program (Phase 2). In line with Governor Murphy’s commitment to building a stronger, fairer New Jersey, $3.5 million will be reserved for entities located in one of the 715 census tracts that was eligible to be designated as an Opportunity Zone.

Eligible Expenses:

*Financing can only be used for expenses incurred on or after August 3, 2021.

  • Inventory
  • Rent/Mortgage
  • Payroll
  • Utilities
  • Personal protective equipment
  • Furniture, fixtures, or equipment that do not require professional installation costs in excess of $1,999.00

The following are NOT eligible uses of Phase 2 Loan funding:

  • Operating expenses incurred prior to August 3, 2021
  • Refinancing of existing debt
  • Personal, non-business obligations or costs incurred by related entities
  • Construction-related expenses or contracts
  • Furniture, fixtures or equipment requiring professional installation costs in excess of $1,999.00

Interest Rate & Terms:

The Small Business Emergency Assistance Loan Program (Phase 2) is structured specifically for entities facing economic challenges due to the COVID-19 pandemic. Financing received through the program is subject to low-cost and flexible terms, including: 

  • 10-year term and amortization
  • 0% interest rate
  • Deferred repayments for 24 months

There are no fees associated with the Small Business Emergency Assistance Loan Program (Phase 2) for the first five years of the loan. After five years, the NJEDA’s standard modification fees will apply, if applicable.

Process to Pre-Register and Apply:

The pre-registration and application for the Small Business Emergency Assistance Loan Program (Phase 2) is currently under development. Please continue to check this page for further updates on timing.

Step 1: Pre-Register

All businesses and nonprofits that would like to apply for financing through the Small Business Emergency Assistance Loan Program (Phase 2) must first pre-register on the NJEDA’s application portal. Pre-registration is not open at this time, but is anticipated to open in July 2021. The exact date and time of pre-registration will be posted to this page when available, and entities may pre-register at any time during the open pre-registration period, as pre-registration is not first come, first served.

As part of pre-registration, entities will need to provide the following information:

  • Contact information for someone who is authorized to speak on behalf of the entity, such as an owner or an executive such as a CEO or Executive Director.
  • Full name of the registered legal entity.
  • Ownership structure(sole proprietorship, LLC, Non-Profit Organization, etc.).
  • 9-digit Employer Identification Number (EIN; Federal Tax ID Number).
  • Date the entity was legally formed AND the date the entity began operating (these dates may be different).
  • Annual revenue based on most recent business tax filing.
  • Total amount of other Federal, State, or county/municipal COVID-19 relief funding.
  • Loan amount the business is requesting from the NJEDA (cannot exceed $100,000).

Step 2: Complete Application Form:

Qualified businesses and nonprofits that submit a completed pre-registration will be able to apply for financing through the Small Business Emergency Assistance Loan Program (Phase 2) in stages.

  • Stage 1 entities will have an exclusive 10-day window to apply for the program.
  • Stage 2 entities will be able to apply at the conclusion of the Stage1 exclusive application window.

Generally speaking, funding will be awarded on a first-come, first-served basis, based on the date and time the NJEDA receives an entity’s completed application form. The application is currently underdevelopment, and the exact date and time of pre-registration will be posted to this page when available.

The application will require entities to provide the following information:

  • Names, personal addresses, dates of birth, and social security numbers of any individuals or entities with ownership of the applicant entity.
  • Information on how the entity intends to use the loan. If you are using the loan for furniture/fixtures/equipment or personal protective equipment, you will need to know whether those items require professional installation and the estimated cost to professionally install them, if applicable.
  • Information on other Federal, State, or county/municipal assistance the entity has applied for and/or received. This may include but is not limited to, PPP, SBA EIDL, NJRA grants, and NJEDA grants or loans. For each item you list, you will need to know: Was your entity approved, declined or is it still under review? What was the amount your entity applied for and/or received? If approved, what is the funding being used for?
  • Answers to the State’s basic debarment questionnaire. This includes being able to affirmatively certify that: the applicant entity is not a home-based business. the applicant entity is not a prohibited business. the applicant entity has been impacted by the COVID-19 pandemic. the applicant entity will make a best effort not to lay off any additional employees and to re-hire any whom you have already laid off. the information you are providing in the application is correct. you will allow the NJEDA to check your entries against other State sources of data. you will authorize NJEDA to obtain a credit report on all guarantors. you are current on all state obligations.

Step 3: Upload Financial Information

Once the NJEDA receives your completed application form, staff will conduct a preliminary review to determine if your entity is eligible. All applicants will receive a communication from NJEDA, even if the Authority does not move forward with your application.

If your entity is determined to be eligible, you will receive an email from NJEDA with instructions to provide additional financial information about your entity. Once you receive this notification from the NJEDA, you will need to log back into the application portal to upload the required financial information. You will have 5 days from the date/time the NJEDA sends the request to upload the required information.

Step 4: Closing

If the NJEDA offers your entity a loan, you will be asked to provide following as part of the closing process:

  1. Evidence of proper business insurance coverage.
  2. Copies of a government issued photo identification document for all individuals who may become party to the loan.
  3. ACH details to enable transmission of proceeds.

Read more at: https://business.nj.gov/covid/emergency-assistance-loan-program

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