How is the NJEDA partnering with CDFIs to support low-cost financing for small businesses and nonprofits impacted by COVID?
Throughout the COVID-19 pandemic, the NJEDA has partnered with multiple Community Development Financial Institutions (CDFIs) to make financial resources available to small businesses in New Jersey. These partnerships leverage New Jersey-based CDFIs to provide low-cost financing to small and micro businesses and nonprofits impacted by the COVID-19 outbreak. The NJEDA’s role in these programs is to support participating CDFIs. Businesses and nonprofits seeking financing should contact the CDFIs directly.
New Jersey Community Capital (NJCC), UCEDC, Regional Business Assistance Corporate (RBAC), Cooperative Business Assistance Corporation (CBAC), Greater Newark Enterprise Corporation (GNEC), and 1st Bergen Federal Credit Union are participating in the Authority’s CDFI Emergency Loan Loss Reserve Fund, and all but 1st Bergen Federal Credit Union also took part in the CDFI Emergency Assistance Grant Program.
The CDFI Emergency Loan Loss Reserve Fund is a $10 million capital reserve fund that the NJEDA is using to take a first loss position on CDFI COVID-related loans that provide low-interest working capital to microbusinesses that have been negatively impacted by the pandemic. The NJEDA is backing these loans up to 50% if they default in the future. This allows the CDFI partners to increase their capacity and participate in more loans, at flexible terms and lower interest rates.
The CDFI Emergency Assistance Grant Program provided five CDFIs grants of $250,000. These grants helped the CDFIs scale their operations in response to high demand for assistance from business owners impacted by the pandemic and buy down interest rates on their loans to offer borrowers more flexible loan terms at lower rates.