The New Jersey Economic Development Authority (NJRDA) has approved changes to the Main Street Micro Business Loan Program. These changes include the removal of the requirement for personal guarantees from owners of micro businesses. The NJEDA will start accepting applications for the program on Thursday, October 6, 2022, at 10:00 a.m. The Main Street Micro Business Loan Program is the successor to the Micro Business Loan Program established by the NJEDA in 2019.
What is it
This program will provide financing of up to $50,000 to eligible micro businesses in New Jersey whose annual gross revenues are $1,500,000 or less, and has 10 or fewer full-time employees at the time of application and three month prior to the date of application. Those who are eligible to apply for the loan include for-profit, non-profit, and home-based businesses registered to do business in New Jersey with a business location, including a home office, in New Jersey. The program has recently been updated to be broadened to enable support for more micro businesses. This consists of offering flexible loan terms and a generous forgiveness component. These changes have made the program more flexible and accessible to smaller, or micro, businesses.
To qualify for the Main Street Micro Business Loan, you must be a nonprofit, for profit, or home-based micro business that meets the following requirements:
When completing the application, some sections will only appear if necessary based on prior responses. The process of applying will look different depending on your business. You will need to provide support of the use of funds with the prior three years of tax returns is available and if this is not possible for you, you will need to provide a financial profit and loss statement.
There is a nonrefundable fee of $100 at the time of application and a $400 closing fee. If you are paying via check, the application will be on hold until the state processes the check. Paying online will help expedite the review process.
Eligible Uses
Non-Eligible Uses
The Main Street Micro Business loan has a standard 10-year term with a 2% interest rate that will be set at approval. During the first year after closing, no payments or interest will accrue and payments of principal and interest will begin year 2.
No payment term amendments are allowed before the end of the 5th year. All other modifications that are unrelated to the payment terms may be permitted throughout the term of the loan. If any payment terms are modified after the 5th year, the business will no longer be eligible for forgiveness.
To qualify for forgiveness for the balance of the loan at the end of the 5th year, the applicant must not be in default, current on all loan payments with no delinquency of more than 90 days, and be able to certify that they are still open and operating as detailed in the loan agreement
An informational session was held on Monday, September 26, 2022. If you were unable to attend and are looking for more information, visit the NJEDA’s page on the Main Street Micro Business Loan Program.
Cannabis businesses are currently not eligible for this loan program, but a program is currently being worked on to provide more options for cannabis dispensaries and businesses. To learn more about cannabusiness in New Jersey, sign up for the free virtual panel, The Business of Cannabis in South Jersey.
If you have any further questions regarding the Main Street Micro Business Loan, whether your business qualifies, and seeing if it is the right fit, contact an Alloy Silverstein advisor today!
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