Protecting NJ innovators and investors during the COVID-19 crisis
Entrepreneurs who impact New Jersey's innovation economy in any of eight sectors laid out by Gov. Phil Murphy may not be able to rely on bank loans as easily as other small businesses during the COVID-19 pandemic, and so the state Economic Development Authority has unveiled a new program for such companies to lean on partnerships with investors.
The Entrepreneur Support Program, which launched last Wednesday, is designed to help entrepreneurs readily access cash from their investor pool, according to Kathleen Coviello, NJEDA executive vice president of technology, life sciences, and entrepreneurship.
"We wanted to create a program that would allow the entrepreneurs who already have an existing relationship with investors to tap into the resources of those investors," Coviello said.
Because the investor market has also taken a hit in the coronavirus crisis, part of the program is a guarantee, with a cap of 80 percent, for investors willing to support an entrepreneur up to $200,000.
And for the entrepreneurs, many of them key creators in fields like software and technology, the program provides stability in an environment where investors often have the upper hand because of the cash they provide.
"In a time when they are most vulnerable as a result of COVID-19, they don't want to be in that negotiation with an investor on how much of their business to give up," Coviello said. "We know that many of these young, entrepreneurial companies don't have banking relationships, that they're not mature enough yet or have enough profitability."
To qualify, an entrepreneurial company must be based in New Jersey with fewer than 25 employees, and half or more of those employees within the state. The company cannot make more than $5 million in annual revenue.
Investor applicants must provide proof of funding after the March 26 state of emergency date, and the NJEDA will do its best to expedite the process for all.
"If an investor wants to provide a note that meets these terms, they can apply after the fact, so they don't have to wait to get into our queue for approval," Coviello said.
For more specifics and how to apply, go to cv.business.nj.gov.