TRENTON, N.J. (July 19, 2019) – In support of Governor Phil Murphy’s plan for building a stronger and fairer economy by better supporting small business, the New Jersey Economic Development Authority (NJEDA) announced yesterday, a new pilot program aimed at making financing available to organizations that provide loans to micro-enterprises and other small businesses that are not yet able to qualify for traditional bank financing. Under the Community Development Financial Institution (CDFI) Initiative, the NJEDA will make up to $15 million available to CDFIs to expand their capacity to provide financing to New Jersey small businesses. Applications for the program are expected to be available in September 2019.
Through the CDFI Initiative, financing is made available to small businesses in two ways. The first is through the Loans to Lenders component of the CDFI Initiative, in which the NJEDA will provide direct loans of up to $1.5 million to experienced CDFIs with a demonstrated lending and portfolio management history. The CDFIs will then use the NJEDA financing to administer term loans or lines of credit to qualified New Jersey small businesses.
The second component of the CDFI Initiative is the Premier CDFI Program, in which NJEDA will provide participations and guarantees of up to $500,000 on CDFI term loans or working capital lines of credit for qualified New Jersey small businesses. NJEDA’s participation provides more flexibility to CDFIs and the borrowing business by reducing the CDFI’s overall exposure in the transaction.
“Building a stronger and fairer economy starts with connecting small businesses with the resources they need to grow and expand,” said NJEDA Chief Executive Officer Tim Sullivan. “CDFIs provide an important function of lending to small businesses that are not yet ready for bank financing, and the CDFI Initiative will enhance the ability of CDFIs to provide micro-enterprises and main street small businesses with capital they need to grow into thriving enterprises.”
The CDFI Initiative is the direct result of feedback the NJEDA has received from CDFI leaders and other organizations that support small businesses in New Jersey. Through those discussions, a need was identified for an expanded partnership between the NJEDA and CDFIs, and a way for CDFIs to work with the NJEDA in a role similar to traditional banks.
“One of the most common challenges we at the NJEDA hear from business owners is that there are not enough resources for businesses that are looking to expand but are not able to qualify for financing from traditional banks,” said NJEDA Director of Small Business Services Christina Fuentes. “The CDFI Initiative fills an important gap and will play a crucial role in helping community-based lending organizations make the necessary investments into small businesses so they can grow and prosper.”
To read Governor Murphy’s full economic plan, please visit: https://nj.gov/economicplan