The state’s Economic Development Authority opened up applications for funding from a newly created $15 million program aimed at helping banks prop up local businesses.
Under the Community Development Financial Institution program, the EDA will provide the funds to local banks, credit unions and other financial institutions so that they can provide financing for small businesses looking to set up shop or expand their footprint in the state.
“Helping a small business succeed provides an immediate, tangible economic impact on a community, which is why building a stronger and fairer economy starts with connecting small businesses to the resources they need to grow,” EDA Chief Executive Officer Tim Sullivan said in a Sept. 12 statement from the EDA.
One facet – the CDFI Loans to Lenders program – provides loans of up to $1.5 million to financial institutions with a “demonstrated lending and portfolio management” track record. The institutions will administer the terms of the loans and lines of credit for the businesses to which they lend.
The second part is the Premier CDFI Program, in which the EDA guarantees up to $500,000 against loans and other lines of credit that the local institutions would offer, thereby reducing the risks that would be taken on by those banks.
“NJEDA’s participations or guarantees of CDFI financing provide the CDFI with more flexibility in financing small businesses by reducing their overall exposure in the transaction,” reads the Thursday statement.