Some Business Resources In The Time Of Covid-19 – Part III

By: Harvey Brofman

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The CARES Act (NJ Resources)

By now you have probably heard that Congress has just passed the $2.2 trillion Coronavirus Aid, Relief and Economic Security Act. The intention of the CARES Act is to assist our nation’s small businesses, certain non-profits, and other employers with their needs during the current Covid-19 crisis by providing resources necessary for survival.

Many of you know that in my other full-time job, I invest in and work with startup companies. The coronavirus pandemic has wreaked havoc on many small businesses, and I have spent a great deal of time with other investors and business leaders to dig into what kind of insight, help or other potential resources we can make available to our portfolio companies.

I thought I would share of few of the things we have found in a couple of posts here, after all, Pharmacy is one of the critical businesses open during the crisis. We thank you for that and appreciate what you are doing for our communities. This is part-III of the series.

State Economic Development Grants – New Jersey

While many states direct small businesses to seek relief under federal programs enacted by The CARES Act, New Jersey, the Garden State, looks to stimulate the growth of New Jersey businesses through a plethora of economic initiatives. Buckle-up, there’s a lot here.

On March 26, 2020, New Jersey allocated more than $75 million to assist businesses and nonprofit organizations, creating multiple relief programs summarized as follows:

Small Business Emergency Assistance Grant Program:

Benefits: $1,000 to $5,000 in grant per small business

Eligible Businesses:

• Have between 1 and 10 full-time employees (“FTE”)

• Have a physical commercial location in the State of New Jersey. Home-based businesses are not eligible for this round of grant funding.

• Must be a small business in the retail, arts, entertainment, recreation, accommodation, food service, and other services– such as repair, maintenance, personal, and laundry services

• Has been negatively impacted by the COVID-19 declared state of emergency in Executive Order 103 (e.g., has been temporarily shut down, has been required to reduce hours, has had at least a 20% drop in revenue, has been materially impacted by employees who cannot work due to the outbreak, or has a supply chain that has materially been disrupted and therefore slowed firm-level production).

• Has a material financial need that cannot be overcome without the grant of emergency relief funds at this time (e.g., does not have significant cash reserves that can support the SME during this period of economic disruption

Other Key Points:

• CEO must certify that the business will make a best effort not to furlough or lay off any individuals

• Grant values are calculated at $1,000 per FTEs reported in NJ business’ Form WR 30

• Minimum Grant Amount (per application): $1,000

• Maximum Grant Amount (per application): $5,000

• Are 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.

• Non-profit organizations are eligible for this program. Eligible non-profits must have status of 501(c)(3), 501(c)(4), 501(c)(7)

• Must certify that the company is in good tax standing with the State

• Are registered to do business in the State of New Jersey

• Apply online at the following Website

Small Business Emergency Assistance Loan Program

Benefits Available: Loans up to $100,000 to NJ-based small businesses and non-profits

Eligible Businesses Must Meet All of the Following Requirements:

• Have a physical commercial location in the State of NJ. Home-based businesses are not eligible for this program

• Have been in existence for at least one year

• Have less than $5M annual revenue

• Can show a global debt service impact related to COVID-19 on or after March 9th, 2020

• Are in good standing with the State and Commissioner of the Department of Labor and Workforce Development

• Are able to provide a CEO certification that the firm will make its best effort to not lay off employees or will re-hire employees as soon as possible

Other Key Points:

• 10-year term and amortization

• 0% interest rate (years 1-5), NJED’s prevailing interest rate floor (capped at 3.0% years 6-10)

• Deferred repayments for 120 months

• No fees associated with the program for the first 5 years of the loan

• Applications open the week on March 30th

• Can show a global debt service coverage ratio of 1.00 (as of December 31, 2019)

• Are registered to do business in the State of NJ

• Must certify that the company is in good tax standing with the State

• Non-profit organizations are eligible for this program; eligible non-profits must have status of 501(c)(3), 501(c)(4), 501(c)(7)

Apply online at the following Website

Community Development Finance Institution (CDFI) Grant Program

Benefits Available: $1.25 million program that will provide grants up to $250,000 to CDFIs to scale operations or reduce interest rates for the duration of the outbreak

• Support the scale-up of the origination, technical support, and underwriting capacity of CDFIs, including hiring staff

• Allow the CDFIs to buy down interest rates in any COVID-19 related emergency working capital loan, thereby providing impacted businesses with lower-costs and more flexible financing

• Apply online at the following Website

The CDFI Emergency Loan Loss Reserve Fund

Benefits Available: $10 million program to provide loan guarantees to CDFIs for working capital loans

• Loans cannot exceed $75,000

• Interest rates on loans must be lower than 3.75%

• Loans must provide flexible loan structures

• Loans cannot exceed a term of five years

Eligible CDFI Emergency Assistance Grant Program:

• Company certifies it has been adversely impacted by COVID-19, (e.g. business must certify it closed, reduced hours, 20% reduction in revenue, 25% reduction in staff availability, or material disruptions to its supply chain)

• Micro or small business owner

• Other Key Points:

Apply online at the following Website

NJ Entrepreneur Support Program

Benefits Available: Investor loans not to exceed $200,000

Eligible Entrepreneurial Businesses:

• Have a minimum of 50% of employees in NJ

• Have less than 25 total employees at the time of application

• Have under $5 million in revenues

• Have corporate headquarters in New Jersey

• Fall under one of the following sectors: advanced manufacturing, information/technology, life sciences, finance and insurance, clean energy, food and beverage, advanced transportation, food and beverage, film and digital media

• Be registered to do business in NJ and must certify that the company is in good tax standing with the State

• Be in good standing with the Department of Labor and Workforce Development

Other Key Points:

• Investors must already have equity interest and equity position in the company

• Qualified investors are not required to be New Jersey residents

• The investment must have been made after March 9th, 2020

• Apply online at the following Website

Small Business Emergency Assistance Guarantee Program

Benefits Available: $10 million working capital loans. The program provides a 50% guarantee, not to exceed a total $100,000 to premier lenders that will issue working capital loans or lines of credit to businesses impacted by businesses

Eligible Businesses:
• Been in existence for at least one full year

• Have $5 million or less in annual revenue

• Can demonstrate a negative impact on your business due to the COVID-19 outbreak

• Have a physical commercial location in the State of New Jersey

• Home-based businesses are not eligible for this round of grant funding

• Can provide CEO certification that you are making a best-effort to not lay off employees or will re-hire employees as soon as possible

• Are registered to do business in NJ and must certify that the company is in good tax standing with the State

• Are in good standing with the New Jersey Department of Labor and Workforce Development

Other Key Points:

• To access this program, the business must work through a Premier Lender

• Apply online at the following Website

Applications for ALL programs are currently being accepted, but funding is limited.