LCR COVID-19 Business Resource Update

LCR COVID-19 Business Resource Update

This past week saw a flurry of activity on the Federal and State level to provide financial support for businesses.

New Jersey Programs

The New Jersey Economic Development Authority (“EDA”) approved a number of programs to assist the business community including:

1. $5,000,000.00 Small Business Emergency Assistance Grant Program. This program will provide grants of up to $5,000.00 in order to assist small businesses in the retail, arts, entertainment, recreation, accommodations, food services and other service industries. The funds are to be used to stabilize operations and to reduce layoffs.

2. $10,000,000.00 Small Business Emergency Assistance Loan Program. This program will provide working capital loans of up to $100,000.00 to businesses with less than $5 million in revenue. These loans will have a 10 year term with interest at 0% for the first 5 years. After 5 years the interest rate will reset to the EDA’s prevailing floor rate (capped at 3%) for the remaining 5 years.

3. $10,000,000.00 Small Business Emergency Assistance Guarantee Program. This program will provide 50% guarantees on working capital loans and waive fees on loans made through lenders that participate in the EDA’s Premier Lender or CDFI programs.

4. $5,000,000.00 New Jersey Entrepreneur Support Program. This program will encourage continued development of innovation economy companies and temporarily support entrepreneurs by providing 80% loan guarantees for working capital loans for startups.

More information regarding these and other EDA programs can be found at:

Federal Stimulus

The $2.2 trillion stimulus package signed into law on March 27th includes relief for small and mid-size businesses, including:

1. $350 billion in forgivable loans, in amounts of up to $10 million based on the business’s payroll between January 1, 2020 and February 29, 2020. These loans will bear interest at the rate of 4% per year. The purpose of the loan is to ensure that small businesses (businesses with fewer than 500 employees) retain their employees. The Small Business Administration will work with banks to administer this program. If the loan proceeds are used for payroll, rent, mortgage interest and utility payments, the principal portion of the loan will be forgiven, if the business maintains the average size of its full-time work force at the time that the business receives the loan. As such, the business will only be responsible for paying the accrued interest.

2. 50% refundable payroll tax credit on employee wages is designed to further incentivize businesses to keep their employees on their payroll.

3. Sole proprietors and self-employed workers may be eligible for the expanded unemployment insurance benefits provided by the law.

4. Delay employer portion of Social Security payroll taxes until 2021 and 2022.

5. Modify net operating loss-reduction rules.

6. Funds from the law’s $425 billion appropriation to the Federal Reserve will be targeted to provide loans and other credit facilities to small businesses.

7.  $150 billion for the health care industry.

8.  $500 billion for state and local governments.

Since the specifics of these programs are still evolving, we will update you as we learn more details. In the meantime, please check the EDA and SBA websites for information regarding the qualifications and application process.