Governor Phil Murphy issued Executive Order 103 on March 9, 2020, declaring a state of emergency and a public health emergency to ramp up New Jersey’s efforts to contain the spread of COVID-19. There were subsequent containment measures announced and are continuing to be announced, including restrictions on public gatherings and limited operating hours for non-essential businesses.
Even though these measures are consistent with similar measures being taken on a national level, which are expected to limit the exposure of the public to COVID-19, there is already and will continue to be an adverse economic impact on the economy of the nation.
Within New Jersey, small businesses, and residents employed by these businesses are facing different economic challenges as businesses struggle to meet payroll obligations and support basic operating expenses that are expected to increase during a prolonged period of restricted operation or closing.
Without a source of immediate relief, these small businesses are being forced to furlough or lay off their employees. At the same time, the State of New Jersey is taking early action on a set of economic stability measures to offer short-term cash flow support to small businesses, and increase overall business confidence, with the following objectives:
- Get funding into the market as soon as possible
- Where possible, adjust existing NJEDA programs to address crisis needs
- Use multiple channels/partners to maximize the marketing of programs and minimize processing capacity constraints
- Leverage private, federal, and philanthropic capital where possible to scale impact
- Provide a suite of compatible offerings to help address varied marketplace needs
The purpose of the Small Business Emergency Assistance Program is to offer short-term, immediate payroll and working capital support to New Jersey small and medium-sized enterprises (businesses and non-profits) (SMEs), between one and 10 full-time employees (FTEs), facing prolonged operating restrictions or closure due to the COVID-19 outbreak, thereby helping to stabilize their operations and minimize any potential furloughs and layoffs.
Under the Small Business Emergency Assistance Grant Program, funding may be used for unrestricted payroll and working capital support. However, funding can’t be used for capital expenses, including construction.
Eligible businesses may receive $1,000 per FTE, with the calculation based on the WR-30 filing from the most recent payroll period from the application date. The minimum grant amount (per application) is $1,000, and the maximum grant amount (per application) is $5,000.
Even though the maximum grant amount per SME is $5,000, specific grant amounts are going to be calculated based on $1,000 per FTE based on the FTEs reported on the company’s most recently filed WR-30 with the New Jersey Department of Labor and Workforce Development (DOL). The implied FTE calculations are going to be rounded to the nearest FTE (for example, 2.24 FTEs would be counted as 2 FTEs for the program, and 2.50 or 2.75 FTEs would be counted as 3 FTEs).
The calculation of the FTEs is going to be based on the weeks they have worked and wages, as reported on the Company’s 4th quarter 2019 WR-30 filing. However, in no event will a company receive grant funding that is based on a number of FTEs that exceeds the number of company employees. That’s because the WR-30 filings will be based on Employer Identification Numbers (EINs), SMEs with more than one EIN will be able to submit one application per EIN. SMEs that have multiple locations but only one EIN can only apply once for a maximum of $5,000.
Out of the $5 million total NJEDA funding commitment, $3 million of the program funds are going to be set aside for SMEs with five or fewer FTEs. However, these funds may be released back to a general pool at the discretion of the Chief Executive Officer if demand from SMEs with five or fewer FTEs has significantly decreased, and demand from SMEs with over five employees remains high.
As the demand for the grant funding may exceed the total available funding, this funding will be considered on a first-come, first-served basis based upon the date and time, which the NJEDA receives a complete application. The NJEDA is going to review applications in the order in which they are received.
Each eligible SME must have between one and 10 FTEs as reported on their New Jersey 4th Quarter 2019 WR-30 filing with the New Jersey Department of Labor and Workforce Development. All non-employee companies, holding companies, companies that use 1099 employees (even though these companies FTEs may be eligible), and larger firms are not eligible for this round of grant funding.
The eligible SME needs to have a physical commercial location in the State of New Jersey (for example, an office, a physical point of sales, a warehouse, manufacturing facility, etc.) No home-based businesses are eligible for this round of grant funding.
The eligible SME needs to operate within the following industries as defined by the SME’s two-digit North American Industry Classification (NAICS) code:
- Accommodation and food services
- Arts, entertainment & recreation
- Other services (restricted to businesses with 3-digit NAICS of 811 and 812
- Non-profit entities with the following designations will also be permitted to receive grant funding: 501(c)(3), 501(c)(4), 501(c)(7).
The businesses that are prohibited but are not limited to include:
- Gambling or gaming activities
- The conduct or purveyance of ‘adult’ (i.e., pornographic, lewd, prurient, obscene, or otherwise similarly disreputable) activities, services, materials, or products (including nude or semi-nude performances or the sale of sexual devices or aids).
- Any auction or bankruptcy or fire or ‘lost-our-lease’ or ‘going-out-of-business’ or similar sale
- Sales by transient merchants
- Christmas tree sales or other outdoor storage
- Any activity constituting a nuisance or any illegal purposes
The CEO/equivalent officer of the eligible SME must self-certify that the firm:
- Will make the best effort not to furlough or lay off any individuals from the time of application through six months after the end of the declared state of emergency (SMEs that have already furloughed or laid-off workers must make a best-effort pledge to re-hire those workers as soon as possible), any material breach of its best efforts certification may result in the NJEDA seeking repayment of the grant.
- Has been negatively impacted by the COVID-19 declared state of emergency on or after March 9, 2020 (example, has been temporarily shut down, has been required to reduce hours, has had at least a 20% drop in revenue, has been materially impacted by employees who cannot work due to the outbreak, or has a supply chain that has materially been disrupted and therefore slowed firm-level production)
- Has a material financial need that can’t be overcome without the grant of emergency relief funds at this time (e.g., doesn’t have significant cash reserves that can support the SME during this period of economic disruption).
Apart from that, an eligible SME must show evidence at the time of application, that the SME is registered to do business in the State of New Jersey and is in good standing with the New Jersey Department of Labor and Workforce Development. In conjunction with the Division of Taxation/Department of Treasury authority under the tax clearance certificate program established pursuant to P.L. 2007, c. 101, the NJEDA will require a certification from the applicant that it doesn’t owe any taxes, the grant will be subject to repayment if the certification isn’t correct.
Finally, eligible SMEs can submit one application per Employer Identification Number, i.e., SMEs with multiple Employer Identification Numbers (EINs) can submit one application per EIN, and businesses with multiple locations but only one EIN will be limited to one application (under the sole EIN).
Applying for the Grant
In order to apply for the grant, businesses will need to provide the following, which includes
- The contact information
You need to get contact information for someone who is authorized to speak on behalf of your company. For example, an owner or an executive such as a CEO or Executive Director.
- Basic information about your company
This would include the following:
- Registered legal name and ‘Doing Business As’ name. To confirm your organization’s registered legal name, visit Business Name Search.
- Federal Employer Identification Number (EIN)
- The year your company was established
- Full-time employees as of December 31, 2019 and Part-Time Employees as of December 31, 2019.
- Your organization’s industry as defined by your NAICS Code
You should confirm your NAICS code before using it in your application.
- Be able to affirmatively answer and/or certify that:
- You’re not a home-based business. A home-based business is a business operated out of a residential property where commercial activity is not zoned to take place.
- You are not a prohibited business.
- You have been impacted by the COVID-19 outbreak.
- You have a material financial need that cannot be overcome without the grant funds.
- You will make the best effort not to lay off any additional employees and re-hire any that you have already laid-off.
- The information you are providing is 100% accurate and correct.
- You will allow the NJEDA to check your entries against other State sources of data.
The NJEDA will award a total of $45 million in federal CARES Act funding to small businesses. To support the Governor’s commitment to diversity and inclusion, $15 million will be reserved for businesses in Opportunity Zone-eligible census tracts, $15 million of Phase 2 funding will be set aside to support qualified businesses that are located in one of the 715 census tracts that were eligible to selected as a New Jersey Opportunity Zone. Additionally, all NAICS code restrictions from Phase 1 of the grant are going to be removed for Phase 2.
The great thing about the Small Business Emergency Assistance Grant Activity is that it has given small businesses the chance to survive during the COVID-19 pandemic. Businesses that have furloughed staff can now re-hire their staff if they want to take advantage of the loan funds. It has leveled the playing field and given them the opportunity to run their business without the threat of closing down or suffering losses during these trying times.
The NJEDA is following protocol and ensuring that all businesses big and small that are eligible for the funds are going to get the necessary help that they need. The funds have given respite to the business and ensured that they could operate without the fear of suffering losses.