State, Counties Offer to Assist Business

//May 7, 2007

Industry Report – County, City Loan and Grant ProgramsINDUSTRY REPORT – Earlier this month, Gov. Jon Corzine announced the elimination of the New Jersey Commerce, Economic Growth & Tourism Commission. But the initiative to cut red tape doesnÂt necessarily mean that the state will decrease its efforts to attract and retain businesses.

At the New Jersey Economic Development Agency (EDA) in Trenton, for example, companies that anticipate creating new jobs can apply for the Business Employment Incentive Program, or BEIP, which offers grants that are usually equal to up to 50 percent of the total amount of state income taxes withheld from the new hires.

But companies that meet certain requirements, such as redeveloping a Brownfield site, or locating in certain municipally designated Âareas in need of redevelopment,Â may qualify for BEIP for grant awards up to 80 percent of the state income taxes withheld from new hires.

Small, medium and large businesses can also apply for EDA loans at below-market rates as low as three percent, or for loan guarantees that can make it easier to secure financing from other sources.

EDA also offers financing that can be used to pay about half the cost of a project, or for fixed assets including building construction, renovations, real estate acquisitions and equipment purchases, or for working capital.

Another program, the New Markets Loans for Development and Communities, offers low-cost financing for commercial, industrial and mixed-use projects in New Jersey”s economically distressed areas. One highlight is a 3 percent fixed-interest rate loan that features interest-only repayments for at least seven years.

The EDA can also facilitate bond-financing programs for manufacturers and other qualified companies. Because the interest payouts may be exempt from state and local income taxes, the bonds can usually be structured with below-market interest rates, saving money for the issuing companies.

Proceeds from these tax-exempt bonds may be used by manufacturers and other qualified for-profit businesses for fixed assets, including real estate acquisitions, machinery, equipment and building construction and renovations. Manufacturers can borrow from between approximately $750,000 to $10 million for periods up to 10 years for equipment, and up to 20 years for real estate.

Cities and counties also offer a variety of programs. ÂWeÂve worked with enterprises that include day-care centers, retailers and manufacturers,Â says Craig Lombardi, a business development specialist at the Newark office of the Economic Development Corp. of Essex County. ÂQualified businesses can get revolving loans, micro loans and other financing, from about $1,500 to as much as 100,000.Â

He notes that terms typically range up to 10 years, with interest rates as low as 50 percent of prime rate

There are qualifications, including an Essex County location and the creation of new jobs.

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