Manufacturers and others are eligible for low-interest loans from the N.J. Economic Development Authority
More than $150 millionÂtax-free and low interestÂis up for grabs for businesses to sell as bonds to raise funds for capital improvements and equipment purchases.
The New Jersey Economic Development Authority (EDA) has $100 million in low-interest, tax-exempt financing available in 2006 for manufacturing firms, commercial and industrial projects, and other types of operations based in the Garden State. Another $58 million of the same type of financing leftover from last yearÂs allotment is also available.
Caren Franzini, CEO of the EDA, says last yearÂs cash wasnÂt fully utilized because organizations either donÂt know about the program or are turned off by its federal restrictions. She says the EDA is working to loosen limitations such as the dollar amount of bondsÂregulated by the Internal Revenue Service tax codeÂ that entities can sell, which is currently capped at $10 million during a six-year period. Franzini would like to see it raised to $20 million because of the high cost of building and equipment-related expenses that manufacturers face.
Eligible organizations whose plans fit in with the EDAÂs economic development goals can sell EDA-issued bonds worth anywhere from $750,000 to $10 million for a term of up to 20 years to financers through the program. While interest rates vary, the EDA says fixed rates have recently ranged from 4% to 5%. Selling companies must put the money toward fixed assets such as equipment and building renovations.
The bonds are an enticing way to raise money because their tax-free status promotes discounting. Buyers are not subject to federal or state taxes on the interest they earn, allowing entities to borrow the money at a more favorable rate than is generally offered through conventional bank financing.
Last year 15 manufacturing companies received $43 million in loans. Since 2001, 123 manufacturers have snagged loans of more than $325 million.
While bond-selling manufacturers may be located anywhere in the state, real estate and construction projects must be located in federally designated Empowerment Zones or Enterprise Communities set up to boost a regionÂs development through tax incentives and grants.
Organizations selling these bonds can combine the financing with other forms of EDA-provided assistance that are given to businesses in return for creating new jobs.
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