This is a story of teamwork, of long hours, of being on the other end of the telephone line listening to the desperate voices of entrepreneurs who were weeks away from losing their businesses … what follows is a description of how four public-sector entities came to the rescue of thousands of small business owners in the state, helping them with federal and state loan and grant programs that were created specifically to help businesses during the COVID-19 pandemic.
Though the crisis is by no means over, the hard work and quick actions of these agencies has created a response mechanism for businesses that will be in place for years to come. The lessons learned will give a boost to entrepreneurial dreams in future times of need.
The New Jersey Economic
Since the pandemic began, the New Jersey Economic Development Authority (NJEDA) has assisted 15,000 small businesses, making more than $115 million available to help business owners with their cash flow and working capital needs.
The NJEDA has developed five core COVID-19 relief packages during this time: the Small Business Emergency Assistance Grant Program; the Small Business Emergency Assistance Loan Program; the New Jersey Entrepreneur Support Program; partnerships with Community Development Financial Institutions; and technical assistance programs.
The Small Business Emergency Assistance Grant Program initially launched in early April. During its Phase 1, the program provided grants of up to $5,000 to a targeted set of businesses from a pool of $5 million in NJEDA funds. In early June, the authority used $50 million in CARES Act funds to add $5 million to Phase 1 of the program and launch Phase 2 with the remaining $45 million. Phase 2 expanded the grant program to a significantly broader range of businesses and increased the maximum grant award to $10,000. To date, more than 10,000 businesses have been approved for grants totaling nearly $32 million.
At the end of July, Governor Murphy announced that another $15.3 million in CARES Act funding would be dedicated to the program. The additional funds will go toward fulfilling eligible Phase 2 grant applications from businesses located in the 12 New Jersey counties that did not receive direct CARES Act funding allocations from the federal government.
The agency also created the $10-million Small Business Emergency Assistance Loan Program that provides working capital loans of up to $100,000 to small and mid-size businesses. To date, 100 businesses have been approved for loans totaling $6.8 million.
To support smaller businesses and those located in the most at-risk communities, the Authority also provided $11.25 million to six Community Development Financial Institutions (CDFIs) to get capital into the hands of those who may have challenges accessing traditional banking. So far, these collaborations have provided $3.6 million to 142 businesses and nonprofits.
To support innovation economy companies, the NJEDA also created the $5-million NJ Entrepreneur Support Program, which provides 80% loan guarantees for working capital loans to incentivize investors to continue supporting early-stage companies that have seen a decline in investment. To date, the NJEDA has approved guarantees on investments totaling more than $2 million into 35 companies.
In recent months, the Authority launched the Ecommerce Technical Assistance Program to help restaurants, retail stores, and personal care businesses continue to operate safely and conduct more business online.
According to NJEDA CEO Tim Sullivan, “As New Jersey moves toward recovery, the NJEDA has also begun updating existing programs to reflect the ‘new normal.’” One example is the expanded Micro Business Loan Program, which provides financing up to $50,000 for businesses and nonprofits with 10 or fewer employees and no greater than $1.5 million in annual revenues.
While the bulk of the services the NJEDA has provided this year have been related to the COVID-19 pandemic, the Authority continues to offer the financing tools and programs that existed before the pandemic as well. “Given the challenges small businesses have faced as a result of COVID-19, our small business programs have been the most popular,” Sullivan says. “Two of our existing lending mechanisms that these businesses continue to leverage are:
Direct Loans – up to $2 million is available for fixed assets, and $750,000 for working capital.
The Premier Lender Program – In partnership with two dozen banks, this program offers up to $2 million in loan participations or $1.5 million in loan guarantees for fixed assets, and loan participations up to $750,000 or $1.5 million guarantees for term working capital purchases. Line of credit guarantees of up to $750,000 are also available through the program.
US Small Business
The fundamental mission of the US Small Business Administration (SBA) remains the same since its founding in 1953: to help Americans start, build and grow businesses. The administration helps small businesses by increasing and improving their access to capital, federal contracting opportunities, entrepreneurial development, and disaster assistance.
However, during most of the pandemic, the administration has been on the front line helping business with federal Paycheck Protection Program (PPP) loans. It has been a time that SBA New Jersey District Director Al Titone describes as “chaotic.”
“The district was getting, and responding to, hundreds of calls and emails a day, with some staff members putting in 12-14 hour days. However, in the end, we were happy that we had some good success. As of 7/30/2020, nearly 154,000 small businesses have received $17.2 billion to help them stay in business. A little more than 98,000 small businesses received $6 billion in Economic Injury Disaster Loans (EIDL) funding.
During the crisis, SBA staff members were “all hands on deck,” according to Titone. “Working remotely, we divided all of the messages that we received daily among our staff of nine and did our best to guide people and give them answers that would assist them. The hard part for all of us was hearing heartbreaking stories from small business owners who might not be able to keep their businesses open. Luckily, the staff all stayed in touch and supported each other with information and camaraderie. I am very proud of our staff and how they adapted and responded to assist small business owners through this unbelievably difficult time in our country.”
Titone says that much of the PPP inquiries now are shifting to applying for loan forgiveness, while many of the EIDL inquiries are calls to track the status of a loan application, request a re-consideration, or reasons why an applicant did not receive their loan.
When asked what regular services the SBA is providing aside from the pandemic, Titone replies, “To be honest, I cannot really say ‘pandemic aside,’ because over half of our fiscal year has been the pandemic.”
NJ Small Business
The mission at the state’s 12 New Jersey Small Business Development Centers (NJSBDCs) is to provide comprehensive assistance for small business owners and entrepreneurs in all 21 counties. According to Deborah Smarth, chief operating officer and associate state director, “We provide assistance (personalized counseling and training) concerning business plans, marketing strategies, accounting and cash flow analysis, competitive pricing strategies, international trade (exports/imports), technology-commercialization, and federal/state/commercial procurement contract opportunities, to name a few services.”
She says the Centers were extremely busy at the height of the COVID-19 pandemic. “At the inception of the outbreak, we were inundated with past and current small business network clients as well as new small business owners who needed assistance to survive. Between March 1st and May 5th alone, our network assisted a little more than 5,800 business owners with counseling, answers to questions, loan applications (PPP, EIDL, NJEDA grants/financing, etc.), and other COVID-related issues,” Smarth says.
It is interesting to note that in federal fiscal year 2018-2019, the NJSBDC network counseled a little more than 5,000 clients. So, the influx of 5,800 small businesses seeking help just within the first two months of the pandemic was fast and furious. “Our centers were working around the clock,” Smarth recalls. “Business owners were in desperate need of guidance and support. We heard their stories of human toll. People were talking about their businesses that they started from scratch years ago, and the fear of losing it all. Our business advisors gave them the best possible guidance to ensure they survive and redevelop a maintenance plan as well as help facilitate disaster assistance financing.”
Now that the pandemic has eased somewhat, the NJSBDC is helping small businesses redevelop their business plans in light of the new public and health safety challenges. “In essence, we are helping them change their business model, helping them: understand their revenues/costs in terms of their whole business operations and strategic plans and ensuring they can make bottom-line decisions on strong foundations attainable through detailed cash-flow analysis, and more,” Smarth says.
Business Action Center
Helping businesses gain access to NJEDA and SBA programs, as well as other resources, is the New Jersey Business Action Center (BAC). Part of the New Jersey Department of State, the BAC “connects business owners with the resources they need, facilitates meetings and follow-ups with regulatory agencies, and helps businesses stay up to date on the latest rules and regulations in order to help them remain in compliance,” says Melanie Willoughby, the center’s executive director.
Since March, BAC’s team of experts has staffed the state’s live chat at cv.business.nj.gov, and continues aiding businesses throughout the continuing pandemic. “The work we have accomplished includes helping businesses understand the governor’s various executive and administrative orders, and how they can follow them safely as they pursue reopening efforts,” Willoughby says. “New Jersey’s small business community is incredibly rich and diverse and we have helped every type of business – from yoga studios to dog groomers – get answers. Our team has also remained available to work one-on-one with businesses as they look for real estate options or financing avenues.”
The need for business assistance has been tremendous and the BAC team has stepped up to the plate. “The entire staff was trained so we could all answer the many questions small businesses have had. So far, our live chat has handled some 29,000 individual requests. We also staffed our Business Helpline at 1-800-JERSEY-7 and have received hundreds of calls. Our team also takes part in webinars and podcasts with chambers of commerce and other organizations, so we find as many ways as possible to reach out and let businesses know we are here to help,” Willoughby explains.
“Our folks traveled to all 21 counties prior to the pandemic to work with businesses,” Willoughby continues. “Now, we, like everyone else, have learned to take our services online, so we can continue to help businesses safely.
“With the aid of the Governor’s Office of Innovation and the NJ Office of Information Technology, we have been able to seamlessly serve businesses in an ever-changing environment,” Willoughby says. “We can be everywhere businesses need a helping hand even faster. This has been a difficult time, and we are working to do our part to help our state’s incredible small business community survive and thrive together.”
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