New Jersey Lending for Equity, Access, and Financing Program (nj leaf) – coming soon
The NJ LEAF pilot loan provides flexible lending options for both fixed assets and working capital, helping licensed recreational cannabis cultivators, manufacturers, and testing laboratories grow and stabilize their operations in New Jersey. For fixed assets, including owner occupied real estate, equipment, and machinery, loan amounts range from a minimum of $100,000 to a maximum of $1,500,000. Eligible cannabis businesses seeking working capital support may access loans starting at $100,000, with a maximum of $500,000. These funding options offer valuable resources for businesses to invest in property, upgrade equipment, and cover day-to-day operational expenses.
Fixed Assets
(Owner Occupied Commercial Real Estate or Equipment)
$100,000 – $1.5 million
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Working Capital
$100,000 – $500,000
Access up to $1.5 million in financing for owner-occupied commercial real estate or equipment and up to $500,000 for working capital needs.
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Favorable Loan Terms:
Terms up to 30 years for real estate, 10 years for equipment, 7 years for working capital.
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NJEDA fixed interest rates based equivalent term US Treasury rate or a floor of 1%, whichever is higher. Additional basis points are applied for credit risk and loan term at the time of closing.
Eligible applicants must meet the following requirements to be eligible for the NJ LEAF program:
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Possess a valid and current recreational annual license digital card as per the final recommendation issued by NJCRC Office of Licensing in one of the following categories: Class 1 Cannabis Cultivator, Class 2 Cannabis Manufacturer, or recreational cannabis Testing Laboratory.
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(Medical Only ATC’s and Medical Only Testing Labs are not eligible)
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Must be based in New Jersey and employ fewer than 250 full-time employees. (Includes total individuals employed at all locations on a full-time time basis in and outside of New Jersey.)
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Be operating, generating revenue, and incurring expenses for at least one full calendar year prior to the date of application.
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Have annual gross revenues of $5 million or less, as reported on the applicant’s most recent federal business tax return required to be filed.
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Additional eligibility requirements are outlined in the NJ LEAF board memo and product specifications.
APPLICATION PROCESS
Applications for the NJ LEAF Pilot Program will be available online at njeda.gov and will be reviewed on a rolling basis, following a first-come, first-served approach as applications are completed. The program will be available for three years from the date applications are made available to the public, or until the total funding pool is exhausted (whichever is sooner).
As part of the application process, NJEDA will request information from the applicant—including any real estate holding company, operating entity, and corporate guarantors, if applicable. If a real estate holding company is involved in the real estate financing transaction, the licensed cannabis-operating entity will remain the primary applicant, and the real estate holding company may be required to serve as a co-applicant.
To be eligible for the NJ LEAF-Pilot Program, the applicant must be a for-profit entity holding a valid and current recreational annual license digital card as per the final recommendation issued by NJCRC in one of the following categories:
- Class 1 Cannabis Cultivator
- Class 2 Cannabis Manufacturer, or
- Cannabis Testing Laboratory
Note: Medicinal-Only ATCs and Medicinal-Only Testing Labs are not eligible.
- Must be based in New Jersey and employ fewer than 250 full-time employees. (Includes total individuals employed at all locations on a full-time time basis in and outside of New Jersey.)
- Be operating, generating revenue, and incurring expenses for at least one full calendar year prior to the date of application.
- Must provide a complete federal business tax return demonstrating a full 12 months of business operations, as shown by the most recent federal business tax return required to be filed.
- Have annual gross revenues of $5 million or less, as reported on the applicant’s most recent federal business tax return required to be filed.
- Commit to the retention and/or creation of one full-time W2 job based in New Jersey for every $65,000 of NJEDA loan exposure within two years of the loan closing date.
- Be able to secure the financing with fixed assets (e.g. real property and/or machinery/equipment).
- Meet a historical global debt service coverage ratio of 1.0x.
- All individuals and/or entities having 10% or greater ownership in the applicant’s business must provide unlimited guarantees for the duration of the loan term.
- At least one personal guarantor (owner of the applicant’s business) must have a credit score of 650 or above in at least one of the following data sources provided in the credit report: Experian FICO II, and TransUnion FICO Classic 04 as provided by CoreLogic Credco.
- Provide valid and current New Jersey Tax Clearance Certificate to demonstrate the applicant is in substantial good standing with the New Jersey Division of Taxation prior to approval.
- Be in substantial good standing with NJEDA, NJCRC, the New Jersey Department of Labor and Workforce Development, and the New Jersey Department of Environmental Protection prior to approval, with all decisions of substantial good standing at the discretion of those entities.
ELIGIBLE USES of FUNDS
Loan proceeds under the NJ LEAF Pilot Program must be used solely to support the licensed applicant’s business operations conducted within the State of New Jersey. Eligible uses of funds include the following:
REAL ESTATE
Funds may be used to purchase or refinance owner-occupied commercial property in New Jersey that is tied to the applicant’s NJCRC license. Loan amounts range from $100,000 to $1.5 million, with a loan-to-value (LTV) ratio of up to 100%. Interest rates are fixed at closing, with terms of up to 30 years plus 25 basis points for each 5-year term of the loan provided beyond the first 10 years. The applicant’s business must occupy and operate at least 51% of the property’s total square footage and must continue to meet owner-occupancy requirements for the duration of the loan term.
Real Estate Transactions Involving Holding Companies
In cases where a real estate holding company is involved in the real estate transaction, the licensed cannabis-operating entity will remain the primary applicant, and the real estate holding company may be required to serve as a co-applicant.
EQUIPMENT
Financing may be used to purchase or refinance equipment that remains at the applicant’s New Jersey commercial business location directly related to the NJCRC license. Loan amounts range from $100,000 to $1.5 million, with an LTV of up to 90% of the equipment’s hard costs. Rolling stock and soft costs (e.g., delivery, warranties) are excluded. Interest rates are fixed, with terms of up to 10 years. Equipment requiring major installation and/or construction, where labor or contract costs exceed $1,999.99, will be subject to compliance with the Prevailing Wage Act, Public Works Contractor Registration Act, and Affirmative Action requirements.
Working Capital
Permanent working capital, a non-revolving fully amortizing loan, may be used to support inventory purchases and recurring operating expenses paid in the ordinary course of business. Loan amounts range from $100,000 to $500,000 and must be secured by real estate, with an LTV of up to 100%. Interest rates are fixed at closing with terms of up to 7 years. Working capital may also be used to refinance existing cannabis-related debt, provided the original use supported business operations of the licensed business establishment and/or to cover NJCRC license renewal fees. Examples of eligible working capital use may include, but are not limited to:
- Future Lease payments for the property tied to the application and the NJCRC cannabis license.
- Future Employee Payroll: as evidenced by a current payroll report or NJ WR30 or New Jersey jobs that may need to be filled (job posting, date of hire, and descriptions would need to be provided) or equivalent payroll documentation (including 1099 contractors). Future Employee Payroll must be for NJ jobs only.
- Future Employee Training: cost to train New Jersey employees or hire a trainer for any function of their business operation.
- Future Professional Services: accounting, human resources, business planning, security, marketing, website creation, lab services and any other outside services that may be needed to operate a cannabis business or maintain an annual license or other NJCRC requirement to operate.
- Future Utility bills for the property tied to the application and NJCRC cannabis license.
Examples of ineligible uses for working capital loans may include, but are not limited to:
- Controlled inventory
- Construction and renovation
- Purchase of land
- Demolition of an existing structure
- Purchase/lease of rolling stock
- Payments or distributions to associates of the borrower other than for ordinary compensation for services rendered.
- Payment of fines, administrative penalties, state, and/or federal taxes, real estate taxes, municipal utilities, and costs associated with added or special assessments.
- Personal, non-business obligations, or costs incurred by related entities.
- Owner payments/salaries
- Travel and entertainment
- Expenses for facilities outside of New Jersey or unrelated to the applicant
- Distributions/return on capital
- Legal expenses associated with litigation involving the State of New Jersey, local New Jersey government, or relating to any regulatory or criminal matter.
All uses and supporting documentation are subject to the review and approval by NJEDA in its sole discretion. The Authority in its sole discretion determines what type of inventories and operating expenses are eligible for working capital support. The Authority reserves the right, in its sole discretion, to require documentation and verification that all loan proceeds have been used solely for their intended and approved purposes as outlined in the loan agreement.
RATES & TERMS
The interest rate for loans under the NJ LEAF Pilot Program is fixed at closing and based on the equivalent term US Treasury rate or a floor of 1%, whichever is higher. Additional basis points are applied for credit risk and loan term at the time of closing. The loan term and amortization will be determined based on the loan’s purpose and the useful life of the collateral provided.
Lien/Collateral/Security Requirements
Collateral, including real estate and equipment/machinery, as well as liens, are required based on the NJEDA’s underwriting analysis. The NJEDA may take a subordinate lien to a senior lender on the same collateral; however, if the NJEDA is the sole lender, the NJEDA lien will be in the first position. Additionally, the loan’s risk rating will be determined according to the NJEDA’s established risk rating methodology.
Financial Projections
CPA prepared detailed financial projections for at least 3 years (including income statements, balance sheets, and cash flow statements) may be considered for loan amounts up to $500,000 together with secured fixed assets (real estate, machinery/equipment) and a majority owner minimum credit score of 680. Projections must indicate a minimum DSCR of 1.0.Projections must be submitted in the original Excel format, with all formulas intact. A written narrative must accompany the financial projections, clearly explaining the key assumptions used (revenue growth, expense trends, and financing terms) as well as the rationale behind the estimates. Projections will be evaluated for reasonableness, consistency with industry benchmarks, and alignment with the applicant’s operational capacity and proposed use of loan proceeds.
Prevailing Wage & Affirmative Action Requirements
Projects utilizing NJEDA financial assistance for construction related costs to include installation and award of a contract for any construction related work as defined by NJ Department of Labor are subject to prevailing wage and Public Works Contractor Registration Act requirements.
For projects receiving financial assistance, any contractor or subcontractor hired for construction work and having a total company workforce of four (4) or more employees must provide documentation demonstrating their good faith efforts to employ minority and women workers in each construction trade. This effort should be consistent with the applicable county employment goals established in accordance with N.J.A.C. 17:27-7.2 and align with the affirmative action requirements outlined in N.J.A.C. 19:30-3.5.
All NJ LEAF Pilot Program approvals will be subject to NJEDA’s credit underwriting policy.
FEES
For the NJ LEAF Pilot Program, fees include a $500 non-refundable application fee, a commitment fee of 0.875% of the loan amount, payable upon acceptance of the term sheet, and a closing fee of 0.875% of the loan amount, due at closing. There is no prepayment penalty, and all fees associated with the NJ LEAF Pilot Program are non-refundable.
An application submitted without a fee is considered incomplete and will not be reviewed until the fee is received.
For more information or to ask a specific question, please send an email to BusinessBanking@njeda.gov and a team member will reach out to you.
QUESTIONS
For more information or to ask a specific question, please send an email to BusinessBanking@njeda.gov and a team member will reach out to you.