Six months after Hurricane Sandy sent thousands of businesses into existential crises, the New Jersey Economic Development Authority is slated to approve a plan today to give grants to affected small businesses, NJBIZ has learned.
The grant program is part of a $1.8 billion plan to spend federal Community Development Block Grant disaster assistance funds. The plan was approved by the U.S. Department of Housing and Urban Development on Monday, and the EDA scheduled a special board meeting this afternoon to formally approve the first initiatives of that program.
The plan includes $460 million in business relief, including $260 million worth of grants, a no-interest loan program, and other measures.
Agency CEO Michele Brown said the agency’s first priority is the grant program.
“I think it’s the greatest need for business,” she said. “And it’s money we know we can get to businesses more quickly than we know we can get loan funding to them.”
Brown said about 5,000 businesses will be helped by the grant program, which will distribute awards capped at $50,000 per business, or $250,000 for businesses with multiple locations.
The grant money will be awarded on a first-come, first-served basis. The program is open to all industries, but Brown said priority will be given to tourism businesses, many of whom are racing to rebuild before the summer season starts.
“That’s one of the reasons we’re focusing on working capital, because it will allow those businesses to hire people, staff up and add inventory,” she said. “It’s the most flexible dollars we can get to increase their liquidity so they can increase their advertising and marketing.”
The EDA will also oversee the $25 million tourism marketing campaign included in the Sandy aid plan. Brown said she’s “pushing hard” to have that campaign up and running by next month.
The grants can be used for a long list of purposes, including payroll, rent, utility bills, marketing, construction and equipment costing less than $5,000 and not requiring installation, but it can’t be used to recover lost profits.
To qualify, a company must have been in business at the time of the storm, had between $25,000 and $5 million in revenue last year, and have sustained at least $5,000 in physical damage.
Home-based businesses are not eligible, though there are some exceptions. For instance, home-based businesses with separate business entrances qualify, as do bed-and-breakfast inns.
The EDA will begin accepting applications Wednesday.
“We’re going to have an online application process, but we want to make sure all the businesses get the customer service that EDA is known for, so we’re going to have individualized personal customer assistance for each business that’s been affected,” Brown said.
To that end, EDA has set up a hotline — (855) SANDY-BZ — to take questions and help with the application process. The website for the application is http://application.njeda.com/strongernjbusiness/. Applicants will have to prove that they have an unmet need after receiving other types of assistance.
“All of the businesses are going to have to show us that they’ve gone through the (U.S. Small Business Administration) application for disaster assistance,” Brown said.
They’ll also have to prove they met the $5,000 damage threshold and that they’ve gone through the commercial insurance process, if they had insurance.
EDA also will look back at revenues and expenses for the previous 12 months. Those numbers will go into a formula that essentially calculates damage suffered minus assistance already received.
“Once you subtract those amounts out, what you’re left with is the unmet need,” Brown said.
Once they’re approved, businesses will have 12 months to make the expenditures and submit the necessary documentation for reimbursement.
The maximum dollar amount of $50,000 was based on a survey the state conducted, which found about two-thirds of affected small businesses listed their losses as $50,000 or less.
Brown said disaster relief has become a major part of EDA’s work in recent months, but she said the agency will add staff to help administer the grant and other recovery programs.
“I will tell you it’s put a tremendous additional burden on many of the people who work here,” she said. “As you know, EDA is one of the smaller agencies in state government, but I’ll tell you I’ve been extraordinarily proud of the way everything is coming together.”
EDA tapped Linda Kellner, who previously ran the state’s Business Action Center, to be director of the authority’s Office of Recovery.
Kellner is hiring a number of full-time employees, but EDA also will use a temporary staffing agency to process applications. She said using an outside firm will allow EDA to scale up or down as needed. She expects to need 30 to 40 people at the height of the program.
It’s unclear how long it will take for the money to be disbursed. Erin Gold, an EDA spokeswoman, said the timetable will vary depending on the types of funding requests, but she said the agency anticipates needing about two weeks once an application is completed to process the documents and disburse the funds. EDA will accept applications through Oct. 31, though it’s conceivable the money could run out before then.
The agency is also preparing to roll out a loan program, which will provide no-interest financing for larger projects. The details of that program are still being worked out, but EDA expects to launch it in June.