New Jersey Announces Second Phase of Small Business Emergency Loans

Updated February 10, 2021:

The NJEDA Small Business Emergency Assistance Loan Program will be deferred to accommodate the rollout of additional federal Paycheck Protection Program (PPP) financing for small businesses. NJEDA did not announce a new launch date.

These “Phase Two” loans offer up to $100,000 in financing for New Jersey small businesses and non-profit organizations negatively impacted by COVID-19. Preregistration is available online.

According to the FAQ, applicants who received Phase One assistance may reapply; however, their total funding may not exceed $100,000 in the aggregate. Businesses must meet certain eligibility requirements including, but not limited to, a physical commercial location within the state, $5 million or less in annual revenue and be fully registered with the New Jersey Department of Treasury. Businesses must have been operational prior to February 24, 2020, to be eligible. Each applicant must submit a certification from a CEO or officer demonstrating a negative impact on their business due to COVID-19.

The loans are authorized for use towards operating expenses including inventory, rent and mortgage payments, payroll, utilities, personal protective equipment, and certain furniture, fixtures, and equipment needed because of COVID-19. Funds may not be used for specific items including, but not limited to, operating expenses incurred prior to March 9, 2020, refinancing of existing debt and construction expenses.

The loans include a 10-year term and 0% interest for the first five years. The program does have certain underwriting criteria, including a minimum global debt service coverage ratio of 1.00x prior to March 9, 2020.

Please note that this information is intended merely as an overview of the loan program. Interested businesses are encouraged to consult the FAQ document for additional details regarding eligibility and loan terms.

In April 2020, the first phase of the NJEDA loan program received an overwhelming response. In 2020, the NJEDA also introduced three phases of small business grants. It remains unclear whether additional grants will be made available in 2021.

Additional information on financial assistance programs is available on the New Jersey COVID-19 Business Information portal.

New Jersey Eases Restrictions on Certain Businesses

Beginning February 5, 2021, capacity limits for New Jersey restaurants will increase from 25% to 35%, subject to certain limitations. The statewide requirement to end bar and restaurant service at 10 p.m. will also be lifted. On November 23, 2020, New Jersey had increased restrictions on business activity and gatherings in response to a surge in COVID-19 cases.

It is important to note that businesses must continue to comply with workplace health and safety standards. Under Executive Order 195, much of this guidance is industry-specific. Employers and business owners should be mindful that New Jersey allows employees to file complaints for alleged violations of these standards directly with the New Jersey Division of Labor and Workforce Development. Members of the public are also being encouraged to report organizations believed to be violating any executive order.

Conclusion

While a new loan program, a decline in COVID-19 cases and the prospect of widespread vaccinations are causes for optimism, New Jersey continues to update industry-specific restrictions on a regular basis. Relative to other jurisdictions, New Jersey has taken an aggressive posture towards enforcement.

New Jersey employers and business owners should consider updating their reopening plans and safety procedures as needed. Because each business faces its own specific circumstances, consultation with counsel may be warranted to ensure compliance.

The Coronavirus Task Force at Klehr Harrison stands ready to assist you in your business and legal needs. We will continue to provide additional information and guidance as the COVID-19 situation develops.