As the state ramps up for a potential public bank, the Economic Development Authority on Wednesday began accepting applications for its micro-business loan program – aimed at helping finance start-ups and small businesses.
Under the initiative, capped at $1 million, businesses can apply for financing of up to $50,000 for expansions or improvements, the EDA said in a Dec. 18 statement.
In order to be eligible, businesses cannot make more than $1.5 million of annual revenue or have more than 10 employees, according to the EDA, which also oversees the state’s other multi-billion dollar tax incentive programs.
The program will enable the EDA “to offer low-cost financing to very small, often early-stage companies,” said Tim Sullivan, the agency’s chief executive officer.
“Improving access to capital and supporting micro-businesses as they grow, create jobs, and invest in our communities is critical to building a stronger, fairer New Jersey economy,” he added.
The loan program would be an “initial demonstration” for how the public bank could work by “making financing available, at a low-cost and with flexible terms, to early-stage businesses that may have difficulty accessing conventional bank financing,” reads the statement from the EDA.
Sullivan in November acknowledged that there could be risk involved with lending to individuals that might typically have a hard time obtaining loans, but assured that the board would be in charge of coming up with the best approach to mitigate those risks.
In November, he also argued that projects such as the micro-business loan program could act as quasi-pilot programs for the public state bank that Gov. Phil Murphy has sought.
Murphy and other advocates argue the state bank could be used to help finance local infrastructure, affordable housing, or student and business loans for lower-income residents who might not have access to that kind of capital.
Such a bank would work by holding millions of taxpayer dollars, usually kept in commercial banks. In November, Murphy signed an executive order creating a task force that will have a year to gauge the feasibility of such a program.