Demand for NJ business aid running 24 times the supply
Just like hospitals dealing with coronavirus patients and the unemployment system struggling to accommodate claims for jobless benefits, the state Economic Development Authority is seeing way more demand for its new grant and loan programs that it can possibly meet.
So far, the agency has paid out 140 grants averaging $3,500 to small businesses with 10 employees or fewer through its initial grant program – a pace that would allow it to distribute around 1,400 grants, given it has $5 million available. They got over 34,000 applications.
Similarly, a loan program with $10 million in funding already has $190 million in requests and counting – 2,400 applicants with only enough cash for a little over 100 loans, which can be as large as $100,000 and would be interest-free for the first five years.
“There’s been tremendous demand for these programs, far outstripping the supply,” said Kevin Quinn, the EDA’s board chairman, who called the efforts “a first step.”
“We knew there was an awful lot of pain and suffering out there and that our $40 million contribution to help lighten that load was certainly not going to be enough. We all hope that there is more to come,” Quinn said.
This week, the EDA began seeking seeking donations to support the grants from philanthropic and private sector sources. The state might also use some of its federal funding to support the program.
“To say that we've been flummoxed by the amount of demand that’s out there for these programs would be an understatement,” said Tim Sullivan, the EDA’s chief executive officer. “I think we all expected to be oversubscribed, and I expected to be oversubscribed quite a bit, but not nearly to the magnitude that we have been.”
At its monthly board meeting Tuesday, the EDA made a number of changes to adjust to the economic impacts of the coronavirus, such as how it will manage its corporate tax credit programs at a time when recipients are hard-pressed to meet job creation and retention requirements.
It will also give towns more time to apply for $50,000 in redevelopment planning funds to address vacant suburban office and retail properties. It got six applications by last week’s original deadline – and heard from two towns that wanted to apply but were sidetracked by the impacts of the virus.
EDA board member Fred Dumont says towns are going to need the help to recover after the pandemic.
“In my town alone, we were at 30% vacancy (in) retail strip malls. That number’s going to go to 70 or maybe even higher after this,” Dumont said.
Sullivan cautions the economic pain will be more than a short-term blip.
“This is going to be a multi-year challenge in recovery. This is not going to be a month or two of recovery and then it’s fixed,” Sullivan said. “We’ll be talking about recovering from this challenge for the foreseeable future.”