GOVERNOR SIGNS NEW MAIN STREET LEGISLATION
Trenton, N.J. (December 16, 2008) – Governor Jon S. Corzine today signed legislation creating the New Jersey Main Street Business Assistance Program, the latest in a series of initiatives established under his Economic Assistance and Recovery Plan to help the citizens and businesses of the Garden State weather the national economic downturn. The program will enable qualified small and mid-size firms and nonprofit organizations in New Jersey to access capital by providing State support for bank lending through loan participations and credit enhancements.
“There are a number of steps we can take to ease the burdens on businesses and provide key incentives, especially for small business enterprises having difficulty staying afloat during the current economic crisis,” said Governor Corzine. “This bill leverages New Jersey’s banks by empowering them to lend to small firms, further enhancing business growth and community investment.”
Developed in partnership with the departments of Banking and Insurance and Treasury and the state’s banking community, the Main Street Business Assistance Program will be funded by a $50-million State appropriation and administered by the New Jersey Economic Development Authority (EDA).
“As the economic engine of many of our State’s local communities, New Jersey relies on the economic success of our small and mid-sized businesses,” said Senator Paul A. Sarlo, (D-Bergen, Essex and Passaic). “However, as we come to grips with a nearly unprecedented national economic crisis, many of these businesses are finding that they don’t have the resources to get by without massive layoffs and down-sizing. This new law will ensure a vibrant small and mid-sized business presence in the Garden State, and will protect the jobs and services people depend on every day.”
The Main Street program will have two components, a loan participation and/or guarantee product that will be offered by the EDA through participating banks and a line of credit guarantee offered through the EDA’s 13 Preferred Lender Partners.
“With the current national recession in mind, national leaders have proposed – and justifiably so – massive billion-dollar bailouts for some of the biggest employers around the country,” said Senator Shirley K. Turner, (D-Mercer). “Unfortunately, these bail-outs do not extend to small business owners who are barely able to keep their heads above water, and cover the cost of doing business in the Garden State while putting food on their families’ plates. This law recognizes that the needs of Main Street, New Jersey are just as important as those of Wall Street investment firms and Motor City auto giants, and provides small-business entrepreneurs the government support they need to get by.”
For fixed assets such as buildings and equipment, the EDA will provide a maximum participation of 25 percent, not to exceed $1 million, in a bank loan and a maximum bank loan guarantee of 50 percent, up to $2 million. For working capital loans to cover operating expenses, the EDA will provide up to 25 percent of a bank loan, not to exceed $750,000, and a maximum guarantee of 50 percent, up to $1.5 million. The aggregate EDA exposure cannot exceed 50 percent of the bank loan amount, or $2 million. The interest rate on EDA loan participations will be fixed at 5 percent for a maximum of five years. Borrowers will also be able to use the Main Street program to refinance higher-interest debt.
“New Jersey’s ability to weather the current recession rests with protecting the small businesses that are the backbone of the state’s economy,” said Assemblyman Gary Schaer (D-Passaic). “This program will be vital to the countless small businesses we need to drive New Jersey’s economy forward and to grow new jobs and investment opportunities.”
The line of credit guarantee, which may also cover fixed assets or working capital, will be set at a maximum of 50 percent of the bank amount, up to a maximum of $250,000.
“Thanks to the leadership of Governor Corzine and the swift action of the Legislature to advance this initiative, the State is in a position to utilize our strong partnership with New Jersey’s banking community to bring relief to companies impacted by the current credit crisis,” said EDA Chief Executive Officer Caren S. Franzini. “EDA has a long history of working with banks to provide loans and guarantees to businesses in New Jersey. With today’s action, we will have an increased capacity to lend, as well as the ability to provide guarantees on lines of credit – a new offering by the EDA in partnership with our Preferred Lenders.”
“The Main Street Business Assistance Program invests in and enhances the New Jersey economy and assists community banks in extending credit to New Jersey businesses.” said DOBI Commissioner Steven M. Goldman. “Our community banks have remained financially sound by continuing to engage in solid lending practices. Through this program, these well run institutions will be able to expand credit and benefit the New Jersey economy even more.”
To qualify, borrowers must be in business at least two years, maintain jobs in New Jersey and meet other EDA eligibility requirements. The law allows this program to be available for the next 24 months. More information can be obtained at www.njeda.gov. Applications will be available in early January 2009.
The bill, A3377/S4, was sponsored in the Assembly by Majority Leader Bonnie Watson Coleman (D-Mercer), Assemblywomen L. Grace Spencer (D-Essex, Union) and Nellie Pou (D-Bergen, Passaic) and Assemblymen Gary S. Schaer (D-Bergen, Essex, Passaic), Douglas H. Fisher (D-Salem, Cumberland, Gloucester) and Jack Conners (D-Burlington, Camden). In the Senate, the legislation primary sponsors were Senators Paul A. Sarlo (D-Bergen, Essex, Passaic) and Shirley K. Turner (D-Mercer)