New NJEDA Program Looks to Support Small Business Growth Through CDFI Initiative

The New Jersey Economic Development Authority on Thursday announced a new pilot program aimed at making financing available to organizations that provide loans to micro-enterprises and other small businesses that are not yet able to qualify for traditional bank financing. The new program is “In support of Gov. Phil Murphy’s plan for building a stronger and fairer economy by better supporting small business.”

Under the Community Development Financial Institution (CDFI) Initiative, the NJEDA will make up to $15 million available to CDFIs to expand their capacity to provide financing to New Jersey small businesses.

There are currently ten CDFI’s in New Jersey including three credit unions (1st Bergen FCU, New Community FCU and North Jersey FCU), one bank (and its holding company) and five community development corporations (CDCs).

Applications for the program are expected to be available in September 2019.

Through the CDFI Initiative, financing is made available to small businesses in two ways. The first is through the Loans to Lenders component, in which the NJEDA will provide direct loans of up to $1.5 million to experienced CDFIs with demonstrated lending and portfolio management history. The CDFIs will then use the financing to administer term loans or lines of credit to qualified New Jersey small businesses.

The second component of the CDFI Initiative is the Premier CDFI Program, in which NJEDA will provide participations and guarantees of up to $500,000 on CDFI term loans or working capital lines of credit for qualified New Jersey small businesses. NJEDA’s participation provides more flexibility to CDFIs and the borrowing business by reducing the CDFI’s overall exposure in the transaction.

Gov. Murphy’s full economic plan is available here.