Bill Text: NJ S3506 | 2022-2023 | Regular Session | Introduced
Bill Title: Establishes Urban Enterprise Zone Microloan Program in EDA to help certain businesses in Urban Enterprise Zones and UEZ-Impacted districts; appropriates $5 million.
Spectrum: Bipartisan Bill
Status: (Introduced - Dead) 2023-01-26 - Introduced in the Senate, Referred to Senate Economic Growth Committee [S3506 Detail]
Download: New_Jersey-2022-S3506-Introduced.html
Sponsored by:
Senator MICHAEL L. TESTA, JR.
District 1 (Atlantic, Cape May and Cumberland)
Senator NILSA I. CRUZ-PEREZ
District 5 (Camden and Gloucester)
SYNOPSIS
Establishes Urban Enterprise Zone Microloan Program in EDA to help certain businesses in Urban Enterprise Zones and UEZ-Impacted districts; appropriates $5 million.
CURRENT VERSION OF TEXT
As introduced.
An Act concerning certain businesses located in urban enterprise zones and supplementing Title 52 of the Revised Statutes.
Be It Enacted by the Senate and General Assembly of the State of New Jersey:
1. As used in P.L. , c. (C. ) (pending before the Legislature as this bill):
"Authority" means the New Jersey Economic Development Authority, established by section 4 of P.L.1974, c.80 (C.34:1B-4).
"Enterprise zone" or "zone" means an urban enterprise zone designated by the New Jersey Urban Enterprise Zone Authority pursuant to P.L.1983, c.303 (C.52:27H-60 et seq.).
"Loan program" means the "Urban Enterprise Zone Microloan Program," established pursuant to section 2 of P.L. , c. (C. ) (pending before the Legislature as this bill).
"Qualified business" means a business entity that is independently owned and operated, operates primarily in this State, and maintains or seeks to create a business location in an enterprise zone or a UEZ-impacted business district.
"Revolving loan fund" means the "Urban Enterprise Zone Microloan Fund," established pursuant to section 3 of P.L. , c. (C. ) (pending before the Legislature as this bill).
"UEZ-impacted business district" or "district" means an economically-distressed business district classified by the New Jersey Urban Enterprise Zone Authority as having been negatively impacted by two or more adjacent urban enterprise zones in which 50 percent less sales tax is collected pursuant to section 21 of P.L.1983, c.303 (C.52:27H-80).
"Veteran" means any resident of this State, now or hereafter, who has been discharged honorably or under general honorable conditions who served in any branch of the Armed Forces of the United States, a Reserve component thereof, or the National Guard of this State or another state.
"Veteran-owned business" means any business that has its principal place of business in the State, is independently owned and operated, and has at least 51 percent of the business owned and controlled by persons who are veterans.
2. a. The authority shall establish and administer the "Urban Enterprise Zone Microloan Program" to provide qualified businesses with funding for operational or capital expenses, or both, to establish a business in an enterprise zone or UEZ-impacted business district.
b. To qualify for the loan program, a qualified business shall demonstrate to the authority that:
(1) the qualified business will become newly engaged in a viable trade or business in an enterprise zone or UEZ-impacted business district;
(2) the qualified business employs or plans to employ at least five full-time 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, which shall not include any owner or persons with a controlling interest in the qualified business, being residents of that zone or district; and
(3) the qualified business lacks sufficient resources to effectively implement the business activities or trade without assistance from the loan program.
c. A qualified business that seeks assistance under the loan program shall submit an application to the authority, in a form and manner prescribed by the authority. In addition to any other information that the authority may deem appropriate, the application shall require the qualified business applicant to submit:
(1) information demonstrating that the qualified business meets the eligibility requirements set forth in subsection b. of this section;
(2) a business plan demonstrating the viability of the business activity or trade and the ability of the business 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 enterprise zone or UEZ-impacted business district. Any owner or persons with a controlling interest in the qualified business may be residents of the zone or district but shall not be included in the count of employees for the purposes of the loan application; and
(3) an outline of the anticipated use of loan proceeds.
d. (1) The authority may approve applications for the loan program on a rolling basis, subject to the availability of funds in the revolving loan fund established pursuant to section 3 of P.L. , c. (C. ) (pending before the Legislature as this bill). Upon approval of an application, the authority shall provide low-interest loans to the qualified business.
(2) In addition to any other terms and conditions that the authority 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 authority, in accordance with subsection e. of this section, that, after a bona-fide effort, the qualified business no longer exists because the trade or business was not viable. Nothing contained in this section shall be construed to provide for compulsory loan forgiveness by the authority, and no loan shall be forgiven in the event of fraud or mismanagement of funds.
(3) Each loan issued under the program shall:
(a) be issued for a term not to exceed six years, with payments not commencing until one year after the loan's approval;
(b) 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
(c) provide more flexible repayment terms than are customarily made available through conventional business loans issued by private lenders.
e. A qualified business that receives assistance under the loan program shall submit an annual report to the authority until such time as the full balance of the loan has been repaid to the authority. The annual report shall be submitted in a form and manner prescribed by the authority. At a minimum, the annual report shall 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.
3. a. The authority shall establish and maintain a non-lapsing revolving fund, known as the "Urban Enterprise Zone Microloan Fund," which shall serve as the repository of all monies used to support the loan program.
b. All loans provided under section 2 of P.L. , c. (C. ) (pending before the Legislature as this bill) shall be issued from monies held in the revolving loan fund. All monies received by the authority from the repayment of a loan provided under section 2 of P.L. , c. (C. ) (pending before the Legislature as this bill) shall be deposited into the revolving loan fund.
c. Any interest collected from loans provided under section 2 of P.L. , c. (C. ) (pending before the Legislature as this bill) may used by the authority to offset the costs of the administration of the loan program or shall otherwise be deposited in the revolving loan fund.
4. a. There is appropriated the sum of $5 million from the General Fund to the New Jersey Economic Development Authority for deposit into the "Urban Enterprise Zone Microloan Fund," established pursuant to section 3 of P.L. , c. (C. ) (pending before the Legislature as this bill).
b. In addition to the
amounts appropriated pursuant to subsection a. of this section, the Legislature
may appropriate such additional funds as may be necessary for the
implementation of P.L. , c. (C. )
(pending before the Legislature as this bill) act. The New Jersey Economic
Development Authority may also utilize other such funds as are available for
implementation of P.L. , c. (C. )
(pending before the Legislature as this bill).
5. Notwithstanding any provision of P.L.1968, c.410 (C.52:14B-1 et
seq.) or any other law to the contrary, the authority may adopt, immediately
upon filing with the Office of Administrative Law and no later than the 90th
day after the effective date of this act, such rules and regulations as the
authority deems necessary to implement the provisions of this act, which
regulations shall be effective for a period not to exceed 12 months. The
regulations shall, at a minimum, set forth the requirements for application
submissions, the criteria for application selections, and the permitted uses of
loan proceeds. The regulations shall thereafter be amended, adopted, or
readopted by the commissioner in accordance with the provisions of P.L.1968,
c.410 (C.52:14B-1 et seq.).
6. This act shall take effect on the first day of the seventh month following enactment.
STATEMENT
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."
