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State EDA Offers
New, Traditional Programs
To Support Small Business Growth
Caren S. Franzini
By Caren S. Franzini
Chief Executive Officer, New Jersey
Economic Development Authority
Seedling plan in soil
Changes in the Preferred Lender Program Support Gov. Corzine's commitment to enhance New Jersey's economy and strengthen communities by streamlining the EDA's loan-approval process and speeding up the flow of capital to growing businesses across the state.

Small and mid-size businesses in New Jersey seeking to acquire, construct or renovate a building, upgrade equipment and machinery, obtain working capital, or refinance higher-interest debt should look into the many programs offered by the New Jersey Economic Development Authority (EDA). Although the EDA has historically assisted a wide range of borrowers, it has traditionally focused its lending resources on small and mid-size businesses, recognizing how vital these sectors are to the vibrancy of New Jersey’s communities. These programs help to fuel economic growth and job creation in the state and support Governor Jon S. Corzine’s Economic Growth Strategy to nurture the growth of small businesses, particularly those owned by women and minorities.

How important are these businesses to New Jersey’s economy? The fact that more than 96 percent of all businesses in New Jersey have fewer than 100 employees and account for over 36 percent of state jobs is one indicator of their significance.

The Washington, D.C-based CFED, a national nonprofit organization focused on expanding economic opportunity, offers another. It ranks New Jersey first in the nation for entrepreneurial energy in 2006 based on the number of new companies established and the new jobs these businesses have created. And to continue this trend, last year alone the EDA provided more than $185 million in funding assistance to 120 business projects—most of which went to help small and mid-size companies grow.

Because small business growth is an essential part of maintaining New Jersey’s high quality of life, in April, the EDA Board took action to reduce interest rate floors by 100 basis points, equivalent to 1 percent, on several of its programs to generate increased economic activity in the state and to meet the changing needs of the marketplace. The change impacts EDA financing assistance made under certain urban loan programs, as well as direct loans offered through the EDA with variable rates, which now have a new interest rate floor of 2 percent instead of the previous 3 percent. Other small-business and brownfields lending programs, along with fixed interest rate direct loans, now carry new interest rate floors of 3 percent as opposed to the traditional 4 percent.

The April Board meeting also resulted in the addition of the EDA’s newest Preferred Lender, Moorestown-based Cornerstone Bank. As a locally owned and managed bank, this addition helps to advance EDA’s goal of expanding the Preferred Lender Program to include more community banks. The expanded program will increase access to affordable financing for smaller companies in communities throughout the state. The program features a fast turnaround time from application to closing and applies to transactions in which the EDA provides a portion of a participating bank’s financing or guarantees part of the bank loan. The quick turnaround from approval to closing provides a strong incentive for borrowers, while the EDA’s exposure by participating in or guaranteeing a portion of a loan reduces the lender’s risk. These changes in the Preferred Lender Program support Gov. Corzine’s commitment to enhance New Jersey’s economy and strengthen communities by streamlining the EDA’s loan-approval process and speeding-up the flow of capital to growing businesses across the state. In addition to Cornerstone Bank, other financial institutions participating in the program are The Bank, Bank of America, Commerce Bank, New Jersey Community Capital, North Fork Bank, PNC Bank, Sovereign Bank and Sun National Bank.

Companies operating in New Jersey for at least one year may be eligible for low-interest, fixed-asset financing up to $300,000 through the EDA’s newest program called Fast Start for Small Business. This program is particularly relevant for those small business owners who have personally maintained strong credit but whose businesses may not have operated for a long enough period to secure traditional bank financing. Underwriting criteria used to evaluate loan applications include the applicant’s financial history, guarantor credit score, lien positions and real estate market value. Prospective borrowers benefit from a streamlined review and approval process and favorable fixed or variable rate pricing.

Part of the Governor’s Economic Growth Strategy also includes providing capital to micro lenders to increase their lending capacity and services to small, minority-owned, and women-owned businesses in distressed areas of the state. To ensure these businesses have access to the critical capital they need, the EDA provided a $500,000 Fund for Community Economic Development loan to the Cooperative Business Assistance Corporation (CBAC). The southern New Jersey nonprofit micro lender will use the financing
to fund additional new loans to small businesses in Camden, Atlantic, Cumberland, Salem, Gloucester, and Cape May counties.

Jeannette Sugay has already received $20,000 from CBAC for working capital in conjunction with her ABC Child Discovery and Learning Center in Egg Harbor. EDA also provided ACCION, one of the largest micro-finance institutions in the United States, with a $500,000 loan to deploy more money to support small business growth in central and northern areas of the state. Celulares Accesorio, an Elizabeth-based cell phone accessories business, recently received $20,000 for inventory and facility renovations to ensure its continued growth.

EDA also took several steps during 2007 to improve the product portfolio and service it offers to assist businesses, nonprofit organizations and municipal governments. It approved significant changes to increase exposure on its direct loan and guarantee programs, raising maximum limits to $1.25 million for fixed asset loans and $750,000 for working capital loans as well as to $1.5 million for both fixed asset loans and working capital loan guarantees. Increasing these loan and guarantee limits will enable the EDA to be a more meaningful partner to the banking community and help more businesses grow, leading to the creation of more jobs and the enhanced vitality of New Jersey’s communities.

To help strengthen the state’s urban communities and satisfy a need for financing medium-size projects in the targeted cities of Atlantic City, Camden, East Orange, Elizabeth, Jersey City, Newark, New Brunswick, Paterson and Trenton; the EDA developed Urban Plus, a new product that provides up to $5 million for projects in these nine urban areas. Urban Plus loans can be made for as long as 10 years with up to a 25-year amortization and be used for fixed assets like buildings and equipment. Loans can fund up to 50 percent of total project costs and must have the support of the municipality. Projects must create or maintain jobs, increase ratables or leverage public financing by a ratio of 1:1.

Additionally, the EDA has bolstered its community development lending resources by allowing up to $50,000 for municipalities to finance feasibility studies and other predevelopment costs associated with their redevelopment efforts, including planning and marketing expenses. Previously, such funds were available only to community development organizations.

Contact the EDA today for more information about financing resources available for small and mid-size businesses. An EDA business development officer will speak with you to gain first-hand insight into your community, answer questions and provide other assistance. For more information about doing business in New Jersey, visit the state’s business portal,



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