EDA RAISES PREFERRED LENDER FINANCING LIMITS TO SUPPORT STATE EFFORTS TO ENCOURAGE SMALL, MID-SIZE BUSINESS GROWTH IN NJ
Trenton, N.J. (December 17, 2007) – The New Jersey Economic Development Authority (EDA) has increased the maximum financing levels available under its Preferred Lender Program to assist growing businesses in the state that want to borrow funds at below-market rates to meet fixed asset and/or working capital needs. The program supports Governor Jon S. Corzine’s Economic Growth Strategy to nurture the growth of small and mid-size businesses, particularly those owned by women and minorities.
The Preferred Lender Program features a fast turnaround time from application to closing and applies to transactions in which the EDA provides a portion of a participating bank’s financing or guarantees part of the bank loan. Eight financial institutions currently participate in the program as Preferred Lenders: The Bank, Bank of America, Commerce Bank, New Jersey Community Capital, North Fork Bank, PNC Bank, Sovereign Bank and Sun National Bank. The program is also expanding to include more community banks.
Preferred Lender maximum limits have been raised to $1.25 million for loan participations and $1.5 million for loan guarantees on fixed asset loans for buildings and equipment and $750,000 and $1.5 million for loan participations and loan guarantees, respectively, on working capital loans to cover operating expenses. The changes complement action taken by the EDA earlier this fall when it approved similar changes to increase exposure on its other existing direct loan and guarantee programs.
“The EDA wants to ensure that New Jersey businesses have the necessary resources to expand,” said EDA Chief Executive Officer Caren S. Franzini. “That’s why we partner with banks through resources such as the Preferred Lender Program to eliminate the financial obstacles that can stall business growth.
“Our enhanced Preferred Lender Program creates new opportunities for EDA’s lending partners because it makes available more funds at below-market interest rates with flexible terms for growing businesses in New Jersey. Quick turnaround time from approval to closing provides a strong incentive for borrowers, while the EDA’s exposure by participating in or guaranteeing a portion of a loan reduces the lender’s risk,” she said.
The EDA reviews Preferred Lender Program applications and renders a decision within three business days and provides a written term sheet within two business days of approval. Upon notice from the participating lender, closing may occur within three business days.
Traditionally, the EDA had granted Preferred Lender status to institutions that presented at least 10 deals to the Authority annually. That requirement has been eliminated to make the program more accessible to smaller community banks whose size and volume of business would not normally support that number of deals, said EDA Senior Vice President of Operations Kathleen E. Stucy.
“Community banks generally focus on small and mid-size businesses, which make up a significant segment of the EDA’s core market,” she said. “By partnering with community banks through this program, we should be able to help more smaller companies obtain affordable financing to support their growth.”
Under the Preferred Lender Program, EDA participation and guarantee amounts can be up to 50 percent of the bank’s financing. Maximum total EDA participation and guarantee assistance is $2.75 million for fixed asset loans and $2.25 million for working capital loans. EDA participation and guarantee terms may be up to 10 years for fixed asset loans and up to five years for working capital loans.
Borrowers of low-interest EDA funding under the Preferred Lender Program have the option of choosing a fixed rate indexed to the five-year Treasury rate or a variable rate indexed to the Prime Rate. Businesses must be New Jersey-based, in operation for at least two years, and commit to creating at least one new job per $50,000 in EDA exposure. Manufacturers need only to maintain one job per $50,000 of EDA exposure.
To learn more about the Preferred Lender program or other products and services of the EDA, contact EDA Customer Care at CustomerCare@njeda.com or (609) 777-4898. For more information about doing business in New Jersey, visit www.NewJerseyBusiness.gov or call (866) 534-7789.
The EDA is an independent, self-sustaining state financing and development agency that works to promote economic growth, job creation and the revitalization of New Jersey’s communities with financing assistance, technical support and entrepreneurial training, and real estate development activities.