Bill > S1364

Introduced Session

This bill establishes the "Urban Enterprise Zone Microloan Program" (loan program) within the New Jersey Economic Development Authority (EDA) to provide qualified businesses with funding for operational or capital expenses, or both, to establish a business in an enterprise zone (zone) or UEZ-impacted business district (district). Loan Program Qualifications The loan program provides low-interest loans to qualified businesses that demonstrate to the EDA that: 1) the qualified business will become newly engaged in a viable trade or business in that zone or district; 2) the qualified business employs or plans to employ at least five employees during every calendar month of the 24-month period following the date of application for the loan program, with at least 50 percent of those employees being residents of that zone or district. Any owner or persons with a controlling interest in the qualified business may be residents of the zone or district but cannot be included in the count of employees for the purposes of the loan application; and 3) the qualified business lacks sufficient resources to effectively implement the business activities or trade without assistance from the loan program. Application Criteria A qualified business that seeks assistance under the loan program is required to submit an application to the EDA, in a form and manner prescribed by the EDA. In addition to any other information that the EDA may deem appropriate, the application is required to request an applicant to submit: information demonstrating that the applicant meets the eligibility requirements; a business plan demonstrating the viability of the business and the ability of the business to employ the requisite number of employees as required by the bill; and an outline of the anticipated use of loan proceeds. Under the bill, the EDA is required to approve applications for the loan program on a rolling basis, subject to the availability of funds. Loan Requirements Upon approval of an application, the authority is to provide low-interest loans to the qualified business. In addition to any other terms and conditions that the EDA may deem appropriate, each loan issued under the loan program may include provisions for the forgiveness of the loan, in whole or in part, within two years of loan fund disbursement, if the qualified business notifies the EDA that, after a bona-fide effort, the qualified business no longer exists because the trade or business was not viable. This provision of the bill should not be construed to provide for compulsory loan forgiveness by the EDA, and no loan will be forgiven in the event of fraud or mismanagement of funds. Each loan issued under the program is required to: 1) be issued for a term not to exceed six years, with payments not commencing until one year after the loan's approval; 2) bear interest at rates not more than three percent for qualified businesses, and not more than zero percent for qualified businesses that are also veteran-owned businesses; and 3) provide more flexible repayment terms than are customarily made available through conventional business loans issued by private lenders. Any qualified business that receives assistance under the loan program is required to submit an annual report to the EDA until such time as the full balance of the loan has been repaid to the EDA. At a minimum, the annual report is required to include information outlining the expenses supported by the loan, describing bona fide efforts to ensure the viability of the business, and assessing the performance of the qualified business, including whether the business still exists. Loan Fund and Appropriation Finally, the bill appropriates $5 million from the General Fund to the EDA to support the operations of the loan program. These monies are to be deposited into a non-lapsing revolving loan fund, known as the "Urban Enterprise Zone Microloan Fund," which the EDA is required to administer for the purposes of the loan program. Any interest collected from loans provided by the loan program may be used by the EDA to offset the costs of the administration of the loan program, or otherwise are required to be deposited in the "Urban Enterprise Zone Microloan Fund."

AI Summary

Committee Categories

Nilsa Cruz-Perez (D)*,  Mike Testa (R)*, 

Introduced in the Senate, Referred to Senate Economic Growth Committee (on 01/09/2024)

Official Document