The NJEDA is now accepting applications for this program.
Please click “APPLY HERE” on the side of this page to start an application.

The Recovery Loan Loss Reserve Fund (“the Fund”) will offer 50% loan guarantees to qualified Community Development Financial Institutions (CDFIs) and Minority Depository Institutions (MDIs) that will create or have an existing eligible loan program that meets the necessary requirements per NJEDA and the federal State Small Business Credit Initiative (SSBCI) criteria. Each entity is eligible for an allocation of up to $2.5 million per entity with a performance period to ensure the program is being utilized and to also assess the potential for an increase in allocation.


This product will allow CDFIs and MDIs to offer an expanded loan product suite to create more robust products that can better serve the entities and small businesses throughout NJ.

The creation of the Recovery Loan Loss Reserve Fund (“the Fund”) will provide Community Development Financial Institutions(CDFIs) and Minority Depository Institutions (MDIs) the ability to provide working capital loans by leveraging their own non-federal resources using a one-to-one match. CDFIs/MDIs must register eligible loans with NJEDA within 90 days after the loan closing to receive the loan guarantee of up to 50%.  The loan guarantee will remain throughout the term of the loan in case of a future default allowing the CDFI/MDI to take on more risk and exposure and do more lending.  Each CDFI/MDI awardee will be responsible for SSBCI reporting and compliance and only loans that meet the terms of the NJEDA Master Guarantee Agreement will be eligible under this guarantee.    

This product will allow these entities to opt in for an allocation up to $2.5 million per entity at time of application. Eligible CDFIs and MDIs will have a performance period to ensure the program is being utilized which may allow for an increase to their allocation.


Eligible Applicants

All entities must have small and micro business lending experience. The CDFIs and MDIs can be based outside of NJ but must use the funds to service eligible NJ based businesses only.

  • Must be a certified Community Development Finance Institutions (CDFI) by the US Department of Treasury or a Minority Depository Institution (MDI) recognized by FDIC and provide current certification by U.S. Department of Treasury or FDIC to support a MDI status.
  • Must be able to demonstrate they have the capacity to create/run a program and attract applicants, underwrite, and approve financial assistance (loan program) that meet the defined parameters as stated in the memo.
  • Must provide a current NJ Tax Clearance Certificate
  • Applicant must be in good standing with Department of Labor and Department of Environmental Protection
  • Must complete a legal debarment questionnaire.
  • Must provide an assurance affirming that no principal of the financial institution lender has been convicted of a sex offense against a minor (as such terms are defined in section 111 of the Sex Offender Registration and Notification Act (42 U.S.C. §16911).

Eligible Loan Criteria

Loan guarantees are only applicable to new or existing lending programs that would include the following features:

  • Loan minimum is $10,000 and maximum is $250,000
  • Applicants can be for-profit or non-profit entities with commercial business locations within NJ.
  • Loan interest rate cannot exceed 12%,
  • Loan can include deferred payments, moratoriums or interest only for up to 12 months,
  • Loan term cannot exceed 7 years,
  • Collateral and personal guarantees are permissible but not required
  • Minimum global debt service coverage ratio of 1.0
  • If creating a new program then minimum credit score must be under 650
  • Loans may be used by the business for operating expenses only.
    • Examples of permitted uses include payroll, marketing, inventory, rent, mortgage/property tax payments, utilities, or any other expenses that are applicable to the daily operation of the business.
    • Ineligible expense uses: any refinancing of existing debt, purchases of equipment, construction, reconstruction, demolition, alteration, repair work, maintenance work, or construction related to installation of equipment where such activity exceeds $1,999.99.
  • Loans must be made to applicants that are in good standing with NJ Department of Taxation and must provide a current tax clearance certificate when the loan is registered with NJEDA.
  • CDFIs and MDIs that have received grants from NJEDA to create lending products or provide technical assistance (i.e., Main Street Lenders Grant) cannot use this guarantee program to support the same recipients of that loan program. Businesses could be served with the technical assistance support and be registered under this program.
  • Loans provided by the CDFIs and MDIs and registered under the product must meet all SSBCI requirements.
  • Must provide an assurance affirming that no principal of the borrowing entity has been convicted of a sex offense against a minor (as such terms are defined in section 111 of the Sex Offender Registration and Notification Act (42 U.S.C. § 16911)).
  • Loan must be registered with NJEDA within 90 days after the closing date of the loan by the CDFI/MDI. Loans beyond this window will not be eligible to be covered by the guaranteed allocation.

Prohibited businesses to lend to include:

  • A business engaged in gambling or gaming activities; the conduct or purveyance of “adult” (i.e., pornographic, lewd, prurient,
    obscene or otherwise similarly disreputable) activities, services, products or materials (including nude or semi-nude performances or the sale of sexual aids or devices); any auction or bankruptcy or fire or “lost-our-lease” or “going- out-of-business” or similar sale; sales by transient merchants, Christmas tree sales or other outdoor storage; any activity constituting a nuisance; or any illegal purposes.
  • A business engaged in speculative activities that profit from fluctuations in price, such as wildcatting for oil and dealing in
    commodities futures, unless those activities are incidental to the regular activities of the business and part of a legitimate risk management strategy to guard against price fluctuations related to the regular activities of the business or through the normal course of trade;
  • A business that earns more than half of its annual net revenue from lending activities, unless the business is (1) a CDFI/MDI that is not a depository institution or a bank holding company, or (2) a Tribal enterprise lender that is not a depository institution or a bank holding company;
  • A business engaged in pyramid sales, where a participant’s primary incentive is based on the sales made by an ever-increasing
    number of participants;
  • A business engaged in activities that are prohibited by federal law or, if permitted by federal law, applicable law in the jurisdiction where the business is located or conducted (this includes businesses that make, sell, service, or distribute products or services used in connection with illegal activity, unless such use can be shown to be completely outside of the business’s intended market); this category of businesses includes direct and indirect marijuana businesses, as defined in SBA Standard Operating
    Procedure 50 10 6; or
  • A business deriving more than one-third of gross annual revenue from legal gambling activities, unless the business is a Tribal SSBCI participant, in which case the Tribal SSBCI participant is prohibited from using SSBCI funds for gaming activities, but is not restricted from using SSBCI funds for non-gaming activities merely due to an organizational tie to a gaming business; “gaming activities” for purposes of Tribal SSBCI programs is defined as Class II and Class III gaming under the Indian Gaming Regulatory Act (IGRA), 25 U.S.C. § 2703.


  • Each CDFI or MDI can apply and opt in to participate for up to $2.5 million at time of application.
  • Each dollar of SSBCI capital must be matched by at least another dollar of private capital. Public funding, including NJ state funding, does not count toward that match.
    Loan program funding cannot be used from a federal source due to the State Small Business Credit Initiative (SSBCI) support contributing to the Fund.
  • If, after the initial review of applications, the total approved amount of the guarantees under the Loan Loss Reserve Fund is less than the aggregate program size of $25 million, additional guarantee amounts can be approved for one or more CDFIs/MDIs
    that could result in the maximum guarantee exceeding $2.5 million as requested.
  • The Master Guarantee Agreement with NJEDA will last for the length of the SSBCI allocation agreement to be executed by US Treasury and NJ Treasury, and loans can be registered for up to this term.
  • At 3 years from closing date NJEDA staff will access overall performance and if the CDFI/MDI does not utilize at least 50% of the loan loss reserve by registering enough loans then their agreement may be reduced or terminated as per their Master Guarantee Agreement.
  • This would then allow NJEDA to be able to reallocate any remaining balances that may remain to existing awardees that may need the additional support if requested. If no additional support is needed by other awardees, then new applications can be considered to ensure the aggregate of the full $25 million is fully utilized to support loans.
  • NJEDA will not be required to provide a guarantee for an ineligible business or use.