In response to the Silicon Valley Bank (SVB) collapse, Gov. Phil Murphy announced that the New Jersey Economic Development Authority (NJEDA) will be launching a series of programs designed to provide emergency assistance to New Jersey-based companies banked by SVB.
Specifically, this package of assistance includes the re-opening of the NJEDA’s Entrepreneur Support Program, the launch of the NJEDA’s Angel Match Program, and the scheduling of a special board meeting for consideration of an emergency liquidity facility.
All programs will provide financial support for companies experiencing liquidity challenges due to the SVB collapse and are designed to help companies meet payroll, pay rent, and continue their day-to-day operations.
Both programs will open on the NJEDA’s website early this week, with Angel Match launching today and the Entrepreneur Support Program launching on Wednesday, March 15th.
“Now, more than ever, it is essential that our state supports companies that contribute to our economy, innovation ecosystem, and the dynamism of our cities,” said Murphy. “By offering a suite of programs for New Jersey entrepreneurs impacted by the SVB collapse, we will continue to keep residents employed and support companies that are vital to our innovation ecosystem.”
Silicon Valley Bank now stands as the second-largest bank failure in U.S. history, after the 2008 collapse of Washington Mutual Bank.
President Joe Biden said this morning that customers of US banks should have confidence that their money will be there when they need it, and promised accountability for leaders of failed institutions, adding, “investors in the banks will not be protected.”
The Biden administration also announced on Sunday that customers of Silicon Valley Bank would have full access to their deposits, even if their account totals were above the maximum $250,000 covered by federal insurance.
Funded at $5 million, the New Jersey Entrepreneur Support Program offers a guarantee to support repayment of an investor loan advanced for working capital purposes and is designed to encourage investors to support businesses within their portfolios during this liquidity crisis. It provides an NJEDA guarantee of up to 80% for an eligible new loan or convertible note by a qualified investor into a New Jersey qualified business, not to exceed a $200,000 guarantee per company.
Funded at $20 million, the Angel Match Program will help early-stage businesses bridge funding gaps as they scale their operations and refine their products. The program, which will match up to $500,000 in direct investments, is designed to fuel the growth of early-stage companies while increasing the pool of available capital, stimulating further investments into New Jersey’s innovation ecosystem. The funding may be used for product development, marketing, research and development, and other working capital needs. This will extend the capital support from investors during this time of uncertain banking resources.
Finally, the NJEDA board will consider the creation of a $10 million emergency liquidity facility that will review financial support requests for New Jersey-based companies with over $250,000 in deposits at SVB. This product is anticipated to support impacted companies with a loan of up to $500,000 to provide short-term financing options for at most 12 months. The Authority’s board will consider the program approval at a board meeting to be scheduled in the coming week.
“During this challenging time, we remain committed to ensuring that investment dollars continue to flow to New Jersey’s emerging technology and life sciences companies,” said NJEDA Chief Economic Transformation Officer Kathleen Coviello. “Entrepreneurial businesses are critical to our state’s overall economy. This suite of programs will connect them with the working capital they need to keep their operations running.”
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