Lawmakers are scaling up a potential state aid program meant to help keep the restaurant and hospitality industry afloat amid a global pandemic, by dramatically ramping up its proposed pot of money from $5 million to $100 million.
Assembly Bill 3959 is meant to help restaurants, bars, cafes and other hospitality businesses by providing interest-free, 10-year loans of up to $10,000 per month per business. Payments would be deferred for the first nine months.
A3959 was sent to Gov. Phil Murphy’s desk on Thursday, after passing both the Assembly and Senate at remotely-held voting sessions that day.
The program would be run by the New Jersey Economic Development Authority, which oversees five other state aid programs meant to provide businesses with immediate cash as they struggle to bring in revenue during the COVID-19 outbreak and statewide shutdown.
The administration has only just begun rolling back some statewide restrictions, as the number of new COVID-19 cases, hospitalizations and fatalities decline.
“With demand plummeting and quarantines and curfews in place across New Jersey, thousands of Garden State restaurants, bars, hotels, and other hospitality-related small businesses are seeing tremendous damage to their bottom-lines, putting businesses at-risk for bankruptcy, eviction, or foreclosure,” the bill’s sponsor, state Sen. Vin Gopal, D-11th District, said in a Thursday statement.
Eligibility under the program would largely be limited to companies that have been in operation for at least a year, with annual revenues up to $2 million. For those in businesses for between six and 12 months, that annual threshold would be lowered to $1 million.
Either way, the applicant needs to show that they’ve kept up with at least 80 percent of payments for the past year. Loan money would have to go toward “immediate, unavoidable” expenses other than payroll costs.
According to the bill, this newly created “NJ Hospitality Emergency Loan Program” would be financed by some of the federal block grants awarded to the state under a $150 billion state aid program, part of the Coronavirus Aid, Relief and Economic Security Act, or CARES Act.
It is not immediately clear why lawmakers opted to increase the size of the loan program by an additional $95 million.
But a $5 million grant program ran out of money just over an hour after applications opened, with more than 32,000 businesses vying for funds.
Demand soared for the NJEDA’s $10 million small business loan program, with 3,260 businesses applying for a combined $228.7 million from the state’s much smaller pot of money. The money for both programs has only just been paid out to businesses in recent weeks.
“A recovery cannot start until adequate amounts of working capital are identified and made available,” Tom Bracken, president of the New Jersey Chamber of Commerce, said in a May 5 statement.