It’s a beautiful day to be an entrepreneur in the Garden State!
On December 30th, 2022, the NJEDA announced that the State of New Jersey would receive more than $255 million in funding via the federal State Small Business Credit Initiative (SSBCI). Upon approval from the Department of Treasury, the NJEDA will utilize this funding to create six distinct programs which will provide financial and technical assistance to small and micro-businesses throughout the region. There will be a particular emphasis on supporting early-stage and innovation-focused companies throughout New Jersey.
The funding, provided by the US Dept. of Treasury, helps to provide investment and capital into small businesses, especially those who would not otherwise have access to funding. To create a more equitable playing field for businesses, the SSBCI also supports businesses owned by Socially and Economically Disadvantaged Individuals (SEDI). Of the total allotted funds, at least $27.5 million will be used to benefit SEDI-owned enterprises too.
This is consistent with Governor Murphy’s mission to forge a more equitable NJ economy. Per the Governor, “The COVID-19 pandemic simultaneously showed the resilience and tenacity of New Jersey’s small business community and the vital importance of getting capital into the hands of small business owners and entrepreneurs who need it most. The infusion of federal funding announced today presents our state with a tremendous opportunity to develop innovative programs to propel our economy forward.”
The six programs that will be created with the SSBCI funding are as follows:
- First, $80 million will be diverted to a Clean Energy Business Financing Program, offering loan participations or companion loans to eligible small businesses looking to finance clean energy projects. As part of the New Jersey Green Fund, the program will provide $1 of SSBCI funding for every $1 of private financing. This program will help small businesses develop and execute clean energy projects and create jobs in the green energy sector.
- $60 million will be allocated for Life Science Investment, allowing NJ-based early-stage life science businesses to access needed funding. In addition, the NJEDA will utilize an NIO (Notice of Investment Opportunity) to seek at least one professional venture capital manager to manage funds and contribute matching private capital.
- A $50 million Capital Fund program will co-invest SSBCI funds in an investment vehicle that supports the purchase of eligible loans from Community Development Financial Institutions (CDFIs) serving New Jersey, allowing them to carry out additional lending. The program manager, who will be identified through a public NIO process, would bring in additional private capital, provide technical assistance to CDFIs, and oversee the movement of funds and required reporting to NJEDA.
- $25 million will be invested into a Recovery Loan Loss Reserve, which will provide CDFIs and Minority Depository Institutions (MDIs) the ability to leverage their resources to support more small businesses. The program offers CDFIs and MDIs a guarantee of 50% for all loans which meet the eligibility criteria. In addition, the CDFIs and MDIs are permitted to request an allocation of up to $2 million per entity.
- A $20 million SEDI Fund will invest funds into one or more venture funds to support seed and early-stage startups from SEDI owners. NJEDA will utilize an NIO process to identify one or more fund managers to manage the funds and contribute matching capital.
- Finally, a $20 million Angel Match Program will match direct investment in early-stage, product-based tech companies on a one-to-one basis. The funding will be provided via an unsecured convertible note ranging from $100,000 to $500,000.
The NJEDA will publish additional details regarding these exciting new programs in the coming weeks. After the first SSBCI was passed in 2010, President Joe Biden went on to fund a second round in 2021 as part of the American Rescue Plan. The American Rescue Plan made $10 billion available for SSBCI allocations across the country. Funds were then non-competitively allocated to states, territories, and Tribal governments. In authorizing this funding, New Jersey hopes to develop a thriving, diverse economy that better serves all New Jerseyans.
The New Jersey Economic Development Authority, the guiding force behind these incredible programs, is the premier agency for driving economic growth in the Garden State. Through its various initiatives, the NJEDA has established New Jersey as a model of a sustainable and inclusive economy. Their partnerships with entities across the state allow the NJEDA to implement critical strategies and program to increase economic vitality, improve the quality of life for residents, and strengthen our state’s overall economic competitiveness.
As the programs from the SSBCI begin to take shape, we look forward to seeing our state’s small businesses thrive. As a city of entrepreneurs, Trenton has much to anticipate with these new initiatives. The NJEDA will continue to publish updates about the program as they become available, so be sure to keep an eye out on their website here: NJEDA – Home. If you have any questions, contact the NJEDA at (844) 965-1125 or CustomerCare@njeda.com. Here’s to an exciting year ahead for NJ’s small business community!