EDA ENHANCES PROGRAM TO EXPAND ACCESS TO CAPITAL FOR NEW JERSEY SMALL BUSINESSES
TRENTON, N.J. (Oct. 27, 2011) – As part of the Christie Administration’s ongoing effort to support small business growth and community investment, the New Jersey Economic Development Authority (EDA) has strengthened the Loan to Lenders component of its Fund for Community Economic Development (FCED) to benefit microlenders, Community Development Financial Institutions (CDFIs) and Urban Enterprise Zones (UEZs) that have a successful lending track record in their local communities. The program enhancements increase the amount of available funding, improve loan terms and expand the use of funds to include lines of credit.
The FCED was created in 1997 through a partnership between the EDA, the State, and public utility companies PSEG and FirstEnergy to provide a source of flexible financing to support urban community development, revitalize local economies, and provide employment for urban residents.
“The Christie Administration has made supporting small business development and community investment a top priority through regulatory reforms, critical tax policy changes and funding assistance,” said EDA Chief Executive Officer Caren S. Franzini. “By strengthening the lending capacity of microlenders and other financial intermediary organizations through the Fund for Community Economic Development, we will be able to assist even more small, women and minority-owned enterprises across the state and reach deeper into New Jersey’s underserved communities.”
The Loan to Lenders component of the FCED makes capital available to microlenders and other financial intermediary organizations that can effectively reach small businesses in local markets. Under the enhanced parameters of the program, organizations with a successful EDA history will now be able to qualify for up to $750,000, an increase of $250,000 from what was previously available; new borrowers may qualify for up to $500,000. The loan term has been extended to 15 years, with interest-only payments for up to five years. Previously, terms were available for up to ten years, with interest-only payments for up to three years. Based on current marketplace needs, the use of funds has also been expanded to include lines of credit. In order to provide meaningful funding to the microlenders, CDFIs and UEZs, the EDA has also recapitalized the funding available under the Loan to Lenders component of the program. The $5 million commitment includes $2 million from the current FCED and $3 million from the recent State Small Business Credit Initiative allocation.
Through the FCED, the EDA also provides predevelopment assistance and permanent financing to support urban community development. Up to $50,000 is available to local groups to finance feasibility studies and other predevelopment costs to determine the viability of a real estate project. Additionally, loans of up to $1.25 million are available to fill financing gaps in the development of community facilities and other real estate-based economic development projects. Since its inception, the FCED has provided over $20 million to microlenders and community development projects. PSEG has committed $5 million to support the program, and FirstEnergy has committed $1 million.
For additional information on changes to the FCED, visit https://www.njeda.com/fced. To learn more about opportunities for business growth throughout New Jersey, visit the state’s business portal at www.NewJerseyBusiness.gov.