As of September 12, 2019, Community Development Financial Institutions (CDFIs) in New Jersey can now apply for funding from the New Jersey Economic Development Authority’s (NJEDA) new CDFI Initiative.
Developed as part of Governor Phil Murphy’s plan to build a stronger, fairer New Jersey economy by supporting small businesses, the NJEDA is making a total of $15 million available to CDFIs that will expand the capacity of these organizations to provide financing and support to small businesses in the Garden State.
“Helping a small business succeed provides an immediate, tangible economic impact on a community, which is why building a stronger and fairer economy starts with connecting small businesses to the resources they need to grow,” said NJEDA Chief Executive Officer Tim Sullivan. “CDFIs are crucial to small businesses that are just getting started because they can lend to businesses that are not yet ready for bank financing, and the CDFI Initiative will enhance the ability of CDFIs to provide micro-enterprises and main street small businesses with the capital they need to thrive.”
The CDFI Initiative, which was first announced in July 2019, is the direct result of feedback the NJEDA has received from CDFI leaders and other organizations that support small businesses in New Jersey. It helps CDFIs assist more small businesses in two ways:
- The CDFI Loans to Lenders component provides direct loans of up to $1.5 million to experienced CDFIs with demonstrated lending and portfolio management history, which the CDFIs will then administer as term loans or lines of credit to qualified New Jersey small businesses.
- The Premier CDFI Program gives CDFIs the opportunity to apply to the NJEDA for Premier CDFI status, which will allow the CDFI to offer term loans or working capital lines of credit for qualified New Jersey small businesses, with NJEDA participations, guarantees, and direct loans of up to $500,000. NJEDA’s participations or guarantees of CDFI financing provide the CDFI with more flexibility in financing small businesses by reducing their overall exposure in the transaction. This is a benefit that NJEDA currently provides to banks and is now offering to qualified CDFIs through the Premier CDFI Program.
“The NJEDA frequently hears from small business owners who are ready to expand but may not yet qualify for financing from traditional banks,” said NJEDA Director of Small Business Services Christina Fuentes. “The CDFI Initiative will help address this challenge by providing low cost funding to various community-based lending organizations who will then create lending products small business owners can utilize in order to grow and prosper.”
Photo of Newark, New Jersey via Adobe Stock.