Money in the pipeline

The New Jersey Economic Development Authority is moving ahead with pre-registration for businesses to apply for some of the $85 million in COVID-19 monetary relief targeted at small businesses and nonprofits, with applications set to formally open at the start of May. That preregistration process is the first step in getting the grants, according to the NJEDA, and will be open online from 9:00 a.m. on April 19 to 5:00 p.m. on April 29. “Certainly brighter days are ahead for small businesses … but this pandemic is still very real and very present,” Tim Sullivan, who heads the NJEDA, said at a remotely held board meeting April 14, where the agency approved the $85 million worth of grants.

Closures, reduced capacity, sanitization requirements and other COVID-19 restrictions have devastated businesses up and down the state, triggering some of the highest unemployment rates in decades. Gov. Phil Murphy approved the $100 million in grant funding, paid for by the 2020 federal COVID-19 relief package. Republican and Democratic lawmakers want more say in how $6.4 billion of forthcoming federal aid will be used to help businesses. GOP lawmakers specifically are asking for $1 billion to be earmarked for struggling businesses.

All told, the NJEDA has awarded $250 million in grants, low-interest loans and other forms of COVID-19 relief to roughly 55,000 businesses. That total included a first round of grants that closed at $11 million to 3,386 businesses; a second round with roughly $57 million going to 19,946 businesses; and a third round of $146 million going to 20,485 businesses, according to NJEDA records. Sullivan said the grant money will “help these businesses stabilize their operations and minimize potential furlough or layoffs.”

A $15 million pot of grant funding for arts, theater and culture organizations will be jointly administered by the NJEDA and the New Jersey State Council on the Arts and move ahead at a later date. “As the [Small Business Administration] Shuttered Venue Program is currently rolling out, we are holding on launching this program to ensure we do not confuse the market,” said Jake McNichol, a spokesperson for the NJEDA. “We anticipate an early summer launch.”

Under that federal program, part of a package Congress approved in December, the federal government is setting aside $16.2 billion for arts and culture organizations across the country, such as performing arts centers, museums, movie theaters, live venues and other institutions.

In February, the NJEDA paused a $10 million low-interest loan program as businesses began to turn their attention to the recently reopened federal Paycheck Protection Program. Businesses can receive loans under the program, which can be forgiven, to cover the costs needed to stay afloat, namely payroll and overhead.

As of April 12, the federal government had awarded $7.2 billion in forgivable PPP loans to nearly 108,000 New Jersey businesses.

Applications for the first round of PPP funding expired in August without an extension, even though hundreds of billions of dollars had not been used and remained inaccessible. It was only just before January that then-President Donald Trump reached an agreement to reopen the application process. So for six months, New Jersey businesses were left only with the much smaller NJEDA state relief programs. On multiple occasions, NJEDA officials said applications outpaced available funding.

Sullivan said in February that the deferral of the $10 million loan program would “provide an opportunity for us to analyze which businesses are unable to benefit from the PPP program and learn what additional support businesses that do receive loans need and adapt our COVID-19 relief efforts to complement federal resources available for small businesses.”

Who gets what

Grant requirements have been consistent over the four rounds of funding. For the loans to be forgiven recipients must make a “best effort” to avoid layoffs or furloughs until six months after Murphy lifts the COVID-19 state of emergency, according to NJEDA documents. Employers who already implemented furloughs or layoffs need to “make a best-effort pledge to re-hire those workers as soon as possible.”

Businesses and nonprofits must demonstrate a clear cause and effect between the COVID-19 pandemic and harmful impact on their business, such as a temporary shutdown or reduced hours to stay in business, a 20% drop in revenue, outbreaks that kept workers at home, or disrupted supply chains. And they must show that the grant could make a significant difference in the business’ bottom line amid the pandemic. The funds can be used to make up for lost revenue, but the state agency specifies that they cannot go towards capital expenses such as construction.

Micro-businesses – those with up to five full time employees – are eligible for grants of up to $10,000, as are sole proprietors. One of the bills Murphy approved sets aside $25 million for that purpose.

Grants are capped at up to $15,000 for businesses with between six and 25 full-time employees and up to $20,000 for businesses with between 26 and 50 full-time employees. Grant sizes can be calculated online.

In addition to the micro-business funding, the state is setting aside $35 million for bars and restaurants, $10 million for child care services, and $15 million for businesses that do not meet these other criteria. A third of those funds for each individual grant program will go toward establishments within the state’s 715 poorest communities, known as Opportunity Zone eligible census tracts.

“These areas were among the ones most significantly affected by the COVID-19 pandemic and the concomitant adverse impact on small businesses and our State’s economy,” according to the April 14 NJEDA board agenda.

Businesses that did not apply or qualify for grants under that third phase of the state program can begin applying on May 3 at 9:00 a.m. Following that are restaurants and child care providers who can apply beginning two days later at 9:00 a.m. on May 5, then micro-businesses at 9:00 a.m. on May 10, and any other businesses at 9:00 a.m. on May 12.

Beyond that, applications will be accepted on a first-come, first-served basis, and are intended to go out the door as quickly as possible. Recipients of grants in any of the prior rounds can submit applications for additional grant funding in this fourth round.