The New Jersey Economic Development Authority (NJEDA) Board today approved the creation of the Main Street Micro Business Loan, which will provide financing of up to $50,000 to eligible micro businesses in New Jersey with ten or fewer full-time employees and no greater than $1.5 million in annual revenues. The Program is the successor to the Micro Business Loan Program established by the NJEDA in 2019.
The Main Street Micro Business Loan is the newest product from the Main Street Recovery Fund—a $100 million suite of programs created or expanded under the Economic Recovery Act of 2020 (ERA), signed by Governor Phil Murphy in January 2021. The ERA includes tax credits to incentivize job creation, new construction, and revitalization of brownfields and historic properties; financial resources for small businesses; support for new supermarkets and healthy food retailers in food desert communities; new funding opportunities for early-stage companies in New Jersey; and support for the growing film and digital media industry.
“New Jersey’s economy depends on small businesses for the jobs they provide and the unique character they bring to our communities, said New Jersey Governor Phil Murphy. “As we emerge from the pandemic, we need to set the stage for a stronger and fairer recovery that creates opportunities for businesses that may have been left out in the past. The Main Street Micro Business Loan Program does just that by helping the smallest of businesses overcome some of the longstanding hurdles associated with accessing capital.”
With $20 million in funds allocated from the Main Street Recovery Fund, financing from the Main Street Micro Business Loan will cover future operating expenses such as inventory, equipment (that does not require installation or construction work totaling more than $1,999.99) and working capital to fund business operating expenses. The loan will have a standard 10-year term and the interest rate will be 2 percent, with no interest and no payments due for the first year.
“Micro businesses, which are often led by women and people of color, are an essential part of the state’s economy, and a major creator of jobs. Unfortunately, they often face disproportionate challenges when it comes to accessing low-cost financing,” said NJEDA Chief Executive Officer Tim Sullivan. “In line with Governor Murphy’s vision for a stronger, fairer New Jersey economy, the Main Street Micro Business Loan Program will ensure more businesses have access to the resources they need to not only survive the economic effects of the pandemic, but to regain their economic stability and build their resilience to future economic disruptions.”
To help ensure all Opportunity Zone eligible tracts in New Jersey receive opportunities for investment that are equitable and inclusive, $8 million will be set aside to support eligible businesses and nonprofits with a primary business location within the 715 census tracts designated as eligible to be selected as an Opportunity Zone.
Nonprofit, for profit, and home-based micro businesses interested in applying for the Main Street Micro Business Loan must meet the following eligibility requirements:
- Must have less than $1.5 million in annual gross revenue for the most current fiscal year (to the extent the business has annual revenues)
- Must have no more than 10 full-time employees
- Must be legally registered to do business in New Jersey, with a business location (other than a home office) in New Jersey
- Must be in existence, as evidenced by date of formation/incorporation, and in operation for at least six months prior to the date of application being made publicly available
- Must be in good standing with the New Jersey Department of Labor and Workforce Development (LWD) and NJ Department of Environmental Protection at the time of application to be eligible for a micro business loan
- Must provide a current tax clearance prior to approval to demonstrate the applicant is in good standing with the NJ Division of Taxation.
The Main Street Micro Business Loan will not require collateral, as the underwriting criteria will be based solely on credit score. Only not-profit organizations will need to be fully underwritten and required to meet a 1.0 debt service coverage ratio. For all other for-profit entities, at least one owner must have a credit score of 600 or greater to be considered eligible. Personal guarantees of all owners or principals will be required of for-profit entities, but not from nonprofit organizations.
Additionally, borrowers under the Main Street Micro Business Loan may be eligible for the balance of the loan to be forgiven at the end of the fifth year. To qualify for this forgiveness, the applicant must be current on all loan payments with no delinquency of more than 90 days and must be able to certify that they are still open and operating as detailed in the loan agreement. Furthermore, recognizing the extraordinary economic circumstances that make this program necessary, the NJEDA reduced the non-refundable application fee to $100 and a closing fee of $400.
Applications for the Main Street Micro Business Loan will be reviewed on a first-come, first-served basis, based on the date/time at which the Authority receives the completed application. Any pending applications to the prior Micro Business Loan Program can still proceed toward closing on their loan. Past recipients of the Micro Business Loan Program are eligible to apply for the Main Street Micro Business Loan. Due to the favorable terms of this product only one application per EIN is allowed.
For more information about the Main Street Micro Business Loan, go to https://www.njeda.com/microbusinessloan/.