The New Jersey Economic Development Authority formally approved the roll out of another $50 million from the federal government toward a grant program meant to prop up small businesses that have taken economic hits from the COVID-19 pandemic and ensuing recession.
“The economic impact of this grant has been profound,” NJEDA Board Chair Kevin Quinn said in his opening remarks at a remotely-held meeting. “We at the EDA have done our modest part in addressing this economic pain.”
The $50 million comes out of the landmark federal stimulus bill approved in March – the Coronavirus Aid, Relief and Economic Security Act, or CARES Act. It includes $5 million toward a second round of a small business grant program.
The initial pot of money, also $5 million, maxed out on applicants an hour after applicants went live in April.
More than $5.5 million – some of that money from other funding sources – was distributed to 1,651 separate businesses, while 1,673 were denied.
With the economy in a state of suspended animation to stop the spread of the virus, and restrictions only now being rolled back, tens of thousands of businesses in New Jersey have seen their revenues shattered.
“With that $5 million, we can fill the applications that we have told were basically wait-listed to the next batch,” NJEDA Chief Executive Officer Tim Sullivan said at the meeting.
That comprises roughly 6,000 businesses, according to NJEDA board documents. There are 28,000 applicants “that we said you could stay on the list but I wouldn’t hold out a ton of hope.”
Now, they can apply for the $45 million pot of money, which makes up the second round and has far greater eligibility.
For one, eligibility is expanded from businesses with up to 10 employees to any businesses with up to 25 employees.
“We have a number of heartbreaking stories, they were seasonal businesses, they had eight employees in the winter, but they had 11 the time the application came around,” making them ineligible, Sullivan said.
“Home-based businesses and sole proprietorships,” according to the board agenda, would now be eligible. That might include plumbers, and people who work exclusively out of a home office, such as architects, Sullivan said.
Applications would likely go live around June 8, according to Sullivan.
“We’ve got to finish the applicants, we’ve got to publish [them] and we’ve got to allow a meaningful amount of time,” Sullivan said.
“The first application took … 15, 20 minutes to fill out. This will probably take a little longer because it’s federal funds. It’s not going to be like getting a mortgage, it’s not an all-day affair.”
A third of the money – $15 million – will go toward the states that were eligible to become opportunity zones, a federal tax break program that offers tax cuts and exemptions for steering investment dollars into lower-income and poverty-stricken neighborhoods.
That’s to “make sure that some money goes to historically underserved communities” such as women, veterans and people of color, Sullivan said.
New Jersey has 169 such zones spanning all 21 counties, but there were 715 census tracts spanning 179 towns and cities that were considered by the Murphy administration as potential zones.
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 the grant program began being paid out to businesses in early April, while loan program payments started going out earlier this month.
“[T]he need to flow more money out of EDA’s small business grant programs is of the utmost importance to our small businesses,” Michelle Siekerka, president and chief executive officer of the New Jersey Business & Industry Association, said in a May 15 statement.
“Simply put, many are struggling for their survival and their need is nothing short of urgent.”
Editor’s Note: A previous version of this story indicated that payments for both the NJEDA grant and loan began being paid out to businesses earlier in May; that was not correct. Grant program payments began being paid out in early April. This post was updated at 8:09 a.m. EST on May 26, 2020 to reflect that change.