Lawmakers push for NJ hospitality business loans – and way more
State lawmakers are advancing a proposal to create a new state loan program aimed at helping the hospitality industry, and some are pushing the Murphy administration to move far more quickly to use federal funding to rescue businesses pushed to the edge by coronavirus shutdowns.
Through the New Jersey Hospitality Small Business Emergency Loan Program, at least $5 million in loans would have to be issued by the Economic Development Authority to beverage manufacturers, special food services and other hospitality industry businesses.
That’s a help for some but much more is needed, said Chris Emigholz, vice president of government affairs for the New Jersey Business and Industry Association.
“Loans sometimes aren’t enough, and there are businesses that need these grants, need something to replace the lost revenue they have so they can keep people on payroll. And there’s a host of programs out there, federal and state programs … but it’s not enough. We need more,” Emigholz said.
The state’s share of $3.44 billion in CARES Act going to New Jersey is nearly $2.4 billion, with the rest being directed to its nine largest counties. Emigholz said some of that money can be used for support programs for small businesses.
“Billions of dollars that are meant for programs like this to help business that we can access and use without costing the state a dime,” Emigholz said.
“We hope that this can be the beginning of something much greater because businesses really need help and the only way we’re going to keep the jobs and redirect that 25% unemployment that we’re seeing right is to help small businesses, help all businesses,” he said.
Assemblyman Jay Webber, R-Morris, said he’s “not sure there’s a clear plan from the administration on what comes next with that funding” – and that a plan is needed quickly.
“How the money appropriated from the federal government is spent is very, very important and that it is appropriated soon I think is vital,” Webber said.
Assemblyman Brian Bergen, R-Morris, said the EDA is moving too slowly to distribute grants and loans to small businesses through programs set up to respond to the coronavirus crisis.
“The NJEDA’s performance, in my opinion, has really been very disappointing to date,” Bergen said.
“I’d just to see us a body, as a Legislature, as a committee to put some pressure on the NJEDA to do what I believe is their job,” he said. “… Put the money in their hands, and put it in their hands now, and not delay these programs any further.”
EDA spokesman Jake McNichol said in an email that just over $3 million of the $3.178 million in grants approved so far through the Small Business Emergency Assistance Grant Program has been distributed to 892 businesses. The program has been allocated $5 million.
In addition, McNichol said, the EDA received a $2 million donation from the Casino Reinvestment Development Authority for grants for small businesses in Atlantic County. Using this funding, it has approved an additional $1.02 million in grants. So far, $899,000 has been distributed to 274 small businesses.
The EDA also received more than 3,500 applications seeking loans through a new $10 million program. None of that money has gone out yet because a financial analysis is being done to determine companies’ ability to repay the state.
“Providing funds to businesses that need help is the NJEDA’s top priority,” McNichol said.
Assemblyman John Burzichelli, D-Gloucester, said EDA is trying but is a small operation.
“The amount of applications that they’ve received for both of those programs was simply huge, and the ability to process has to happen in some orderly fashion,” he said. “So everyone is correct in saying we’ve got to get the money out. Could not agree more. I think the EDA is making their best effort.”
“It’s not as if an effort isn’t being made,” Burzichelli said, “but when you consider the demand being made against the normal structure in place to service what would be a normal flow of demand, it’s not balanced because you cannot possibly be prepared for what we’re undertaking here.”
Companies would qualify under the New Jersey Hospitality Small Business Emergency Loan Program if they had annual sales revenue below $2 million in the previous year. Companies less than a year old would qualify if they had sales revenue below $1 million. Companies in operation for less than six months wouldn’t be eligible.
Loans could cover only immediate, unavoidable expenses other than payroll incurred since March 9, when Gov. Phil Murphy declared a public health emergency and state of emergency. Loans would be capped at $10,000 a month, interest free, to be repaid over 10 years, with payments deferred for nine months.
The $5 million appropriation was removed from the bill, which advanced on the same day that Murphy vetoed other legislation that was passed in March that would have appropriated state funds.
The committee also advanced a separate bill that would make small producers of alcoholic beverages eligible during the pandemic for an existing EDA loan program for vineyards and wineries.
Another bill that advanced would allow bars, restaurants, breweries, wineries and distilleries to sell and deliver alcoholic beverages and cocktails.