COVID-19 Business Funding Programs in New Jersey and Pennsylvania

** Update – April 13, 2020: Less than one hour after applications were accepted, the $10M NJEDA loan fund was exhausted. **

The COVID-19 health crisis has significantly reshaped the business landscape. The convergence of forced business closures and dwindling demand for services has forced many to make difficult business decisions. For some, this has resulted in the need to layoff or furlough employees, while others are carefully analyzing operating expenses. Although the impact is different for each business, it’s clear the effect has been significant. This is apparent by the number of companies seeking new sources of working capital. Some are relying on expanded lines of credit, while others are evaluating the various loan programs intended to bolster cash flow and retain employees. In addition to assistance via the federal Coronavirus Aid, Relief, and Economic Security (CARES) Act, there are several state and local specific loan programs designed to provide a rapid cash infusion. Since there is an overwhelming amount of information available, many in New Jersey and Pennsylvania are wondering which programs make the most sense. To help clients, prospects, and others, Klatzkin has provided a summary of key state programs below.

New Jersey Loan Programs

New Jersey Economic Development Authority (NJEDA)

• Small Business Emergency Assistance Loan Program – The NJEDA Small Business Emergency Assistance Loan Program is designed to help qualified New Jersey-based businesses and nonprofits adversely impacted by the COVID-19 emergency. To qualify, a company must have an in-state commercial location, less than $5M in revenue, one or more years in business, a Minimum Global Debt service ratio of 1.0, a minimum credit score of 600 for one guarantor and demonstrate the negative impact of the emergency. To make it easy to determine if a company qualifies for the program, there is an Emergency Assistance Eligibility Wizard available online.  The maximum amount available is $100,000, with a term of up to ten years. The interest rate is determined by the repayment period with 0% for 1-5 years and 1-3% for a 6-10-year repayment window. There is an initial payment deferral option of 12 months. Application acceptance starts on Monday, April 13, 2020, at 9:00 am EST and concludes on Monday, April 20, 2020, at 9:00 am EST. Since the loan program fund is limited to $10M, qualifying companies should submit their application as early as possible.

Pennsylvania Loan Programs

• Pennsylvania Industrial Development Authority (PIDA) – The PIDA program provides low-interest loans and lines of credit to eligible businesses that create and retain full-time jobs aimed at developing industrial parks and multi-tenant facilities. Loans are administered through certified economic development agencies that partner with the PIDA. Eligible companies include those in manufacturing, industrial, agricultural, research and development, hospitality, defense conversion, construction, daycare, and certain technology companies.  The loan is available to companies with eligible projects, including land and building costs, machinery and equipment costs, exporting activities, pollution prevention and energy-efficient equipment and processes, multi-tenant facility projects, and more. Loan terms include up to 15 years for building acquisition, construction and renovation projects and up to 10 years for machinery and equipment purchases. Working capital lines of credit have a 1-year term and can be renewed. The available loan amount varies by project, but interest rates are tied in current market rates. Additional program information is available through the Pennsylvania Department of Community and Economic Development.

Contact Us

These above-referenced programs can be combined with current SBA offerings such as the Payroll Protection Program and Economic Injury Disaster Loans. The combination can provide much-needed relief for impacted companies. If you have questions about the information outlined above or need assistance with another COVID-19 issue. Klatzkin can help. For additional information, click here to contact us.

The above represents our best understanding and interpretation of the material covered as of the date of this post. Things are moving at a rapid pace, and as such, information is subject to change.  This information is provided for informational purposes only and is not intended to be a substitute for obtaining accounting, tax, or financial advice from an accountant.