Business loan

EDA board approves $ 20 million for Main Street microenterprise loan program

The board of directors of the New Jersey Economic Development Authority on Wednesday approved the creation of the Main Street Micro Business Loan, which will provide funding of up to $ 50,000 to qualifying New Jersey microenterprises with 10 or fewer full-time employees and no more than $ 1.5 million. in annual income.

The program succeeds the microenterprise loan program established by EDA in 2019.

The Main Street Micro Business Loan is the most recent product of the Main Street Recovery Fund, a series of $ 100 million programs created or expanded under the Economic Recovery Act of 2020.

The Main Street Micro-Business Loan will cover future operating expenses such as inventory, equipment (which does not require installation or construction work totaling more than $ 1,999.99) and the turnover to fund the operating expenses of the business. The loan will have a standard term of 10 years and the interest rate will be 2% with no interest or payment due in the first year.

To help ensure that all sectors eligible for the Opportunity Zone in New Jersey receive fair and inclusive investment opportunities, $ 8 million will be set aside to support qualifying businesses and nonprofits with a primary business location within the 715 census tracts designated as eligible for selection as an area of ​​opportunity.

Non-profit, for-profit, and home-based microenterprises wishing to apply for the Main Street Microenterprise Loan must meet the following eligibility requirements:

  • Must have less than $ 1.5 million in gross annual revenue for the most recent fiscal year (as long as the business has annual revenue);
  • Must have no more than 10 full-time employees;
  • Must be legally registered to do business in New Jersey, with a commercial location (other than a home office) in New Jersey;
  • Must exist, as evidenced by the date of incorporation / incorporation, and have been in business for at least six months prior to the date the application is made publicly available;
  • Must be in good standing with the Ministry of Labor and Workforce Development and the Ministry 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 that the applicant is in good standing with the Taxation Division.

The Main Street Micro Business Loan will not require collateral as the underwriting criteria will be based solely on credit score. Only nonprofits will need to be fully underwritten and will need to meet a debt service coverage ratio of 1.0. For all other for-profit entities, at least one owner must have a credit score of 600 or higher to be considered eligible. Personal guarantees from all owners or principals will be required from for-profit entities, but not from non-profit organizations.

Additionally, borrowers under the Main Street Micro Business Loan may be eligible to have the loan balance forgiven at the end of the fifth year. To qualify for this discount, the applicant must be up to date on all loan payments without default of more than 90 days and must be able to certify that they are still open and functioning as detailed in the loan agreement. . Additionally, recognizing the extraordinary economic circumstances that make this program necessary, NJEDA has reduced the non-refundable application fee to $ 100 and a closing fee to $ 400.

Main Street Micro-Business Loan applications will be reviewed on a first-come, first-served basis, based on the date and time the EDA receives the completed application. All pending applications from the previous microenterprise loan program can still proceed to close their loan. Former beneficiaries of the Microenterprise Loan Program are eligible to apply for the Main Street Microenterprise Loan. Due to the favorable conditions of this product, only one request per EIN is allowed.

For more information on the Main Street Micro-Business Loan, click here.

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