Beginning Friday at 9 a.m., thousands of businesses across the Garden State that have been financially hit by the COVID-19 pandemic and its ensuing mass closures will have the opportunity to get at least some relief from the state.
The New Jersey Economic Development Authority’s $5 million grant program will go live then, and the application will be live for a whole week.
“I’d be shocked if we don’t have to close it earlier because of the oversubscription,” EDA Chief Executive Officer Tim Sullivan cautioned at a webinar on the grant program, which the agency said drew out more than 5,000 attendees.
Businesses up and down the state have been forced to drastically cut operations because of a steep drop in customers as residents stay home to avoid spreading the virus,and as Gov. Phil Murphy orders significant closures of “non-essential” brick and mortar shops.
“There are firms that – entrepreneurs and business owners – who woke up one day and through no fault of their own had awful things happen around them and to them,” Sullivan said.
The grant program is the first of $40 million in grants, loans and loan guarantees from the EDA, part of a broader $75 million pot of money that will be made available through the agency and private lenders.
Days ago, the EDA put online an “eligibility wizard” for business owners to gauge which state assistance programs could help them the most.
More broadly, a host of federal tax incentives are coming down the pipeline under the Families First Coronavirus Response Act, as well as incentives, the much-famed individual checks and sweeping unemployment reforms spelled out in the “Coronavirus Ad, Relief, and Economic Security Act.”
Here’s a rundown of how to get both federal and state relief:
EDA Small Business Emergency Assistance Grant Program
- Capped at $5 million, with between 1,000 and 2,000 applicants expected
- Grants are between $1,000 and $2,000 for companies employing up to 10 people
- Companies must have an office in New Jersey—home offices do not qualify
- Businesses have to show they will not lay off any employees, and that they’ve been hit by the COVID-19 outbreak
- Applications will be available via the state’s COVID-19 portal
- Sample applications and forms are already available online
- A grant size calculator is also available
The federal stimulus bill includes $260 billion in federal unemployment benefits. Workers who have lost their jobs will receive an additional $600 a week in benefits through July.
That also applies to self-employed and “gig economy” freelance workers, and in order to get the added benefits one would need to fill out the typical state unemployment application.
The extra benefits will likely go out starting the week of April 6 for people who have already filed, Murphy said at a March 31 press conference.
Federal tax credits
Employers can get reimbursed by the federal government for a slew of costs incured by keeping workers on the payroll during the COVID-19 outbreak.
The CARE Act lets businesses get tax refunds based on 50 percent of employee wages up to $10,000 each quarter, with an overall cap of $5,000. Those would have to be claimed at each quarter.
The FFCRA requires businesses with less than 500 employees to provide 80 hours – or two weeks – of paid leave to their workers. And it provides 12 weeks of protected leave under the Family and Medical Leave program—two weeks unpaid and the other 10 weeks paid.
“Covered employers qualify for dollar-for-dollar reimbursement through tax credits for all qualifying wages paid under the FFCRA,” reads a release from the IRS.
As of press time, those specifics are still in the weeds.
That tax credit “immediately and fully reimburses employers with fewer than 500 employees by allowing them to reduce their federal payroll taxes by the amount they spent on emergency leave,” according to the New Jersey Department of Labor and Workforce Development.
Small business loans
The federal stimulus bill allows small businesses and nonprofits to apply through Dec. 18 for disaster relief loans of up to $2 million from the U.S. Small Business Administration. The financing is aimed at helping businesses with day-to-day expenses like rent and utilities, and payroll.
Companies with up to 500 employees can apply for the loans, and payments will be deferred until after Dec. 31.
The interest rate for the loans, known as Economic Injury Loans, would stay at 3.75 percent for small businesses and 2.75 percent for nonprofits, and the loan term would be capped at 30 years.
Paycheck Protection Program
The SBA’s second loan program is the PPP, which offers forgivable loans of up to $10 million for companies with up to 500 employees. The loan will be calculated as 2.5 times the payroll expenses for the loan period. Interest rates will start at 0.5 percent with a cap at 4 percent.
Companies with less than 500 employees can apply beginning on April 3, followed by independent contractors and self-employed individuals on April 10.
The loans will be forgiven if they are used to cover payroll, and most mortgage interest, rent and utilities for eight weeks after the loan is made. Businesses have to keep the employee and compensation levels consistent.
Restaurant and hospitality businesses, which have been hit particularly hard, are eligible if they have less than 500 employees at any one franchise location.
Small Business Emergency Loan Program
The EDA $10 million loan program offers loans of up to $100,000 a year for companies with revenue up to $5 million a year.
That application is likely to go live in the next week, but details are still forthcoming.
Community Development Finance Institution (CDFI) Emergency Loan Loss Reserve Fund
EDA $10 million program, operated through community development financial institutions, or CDFIs, so that the state agency can provide collateral to businesses. The loans must be capped at $75,000 with interest rates at 3.75 percent and a lifetime of up to five years.
NJ Entrepreneur Support Program
EDA $5 million program that provides loan guarantees of up to 80 percent for entrepreneurs and startups focusing on advanced manufacturing, information technology, life sciences, finance and insurance, clean energy, food and beverage, advanced transportation, or film and digital media.
Eligible businesses must make up to $5 million a year and have no more than 25 employees.
Emergency Technical Assistance Program
EDA $150,000 program where four chambers of commerce across the state – the African American Chamber of Commerce, the New Jersey State Veterans Chamber of Commerce, and the Statewide Hispanic Chamber of Commerce –, as well as Rising Tide Capital, will help businesses prepare their applications for federal aid.
Editor’s Note: This article was updated on April 1, 2020, at 4:03 p.m. EST to add the “eligibility wizard,” comments from the New Jersey Department of Labor and Workforce Development, as well as specifics related to the Paycheck Protection Program, Small Business Emergency Loan Program, Community Development Finance Institution (CDFI) Emergency Loan Loss Reserve Fund, NJ Entrepreneur Support Program, and Emergency Technical Assistance Program.
This article was updated at 4:50 p.m. EST on April 1, 2020 to correct the interest rate for Economic Injury Loans and to remove duplicate information.
This article was updated at 5:44 p.m. EST on April 2, 2020: A previous version of this article inaccurately referred to one of the federal stimulus programs as the Payment Protection Program; it is the Paycheck Protection Program. Information regarding the CARE Act was also updated. A previous version said that tax refunds were based on 50 percent of employee wages per quarter and capped at $10,000 per work; tax refunds are based on 50 percent of employee wages up to $10,000 each quarter with an overall cap of $5,000.