Business Owners/Entrepreneurs Provided Insight Into Key Financing Tools Available Through EDA.

Business Editors

BASKING RIDGE, N.J.--(BUSINESS WIRE)--Oct. 23, 2002

In an effort to provide the business owners of New Jersey with key insights in how best to finance their company's future, leaders from the New Jersey Economic Development Authority (EDA) joined NJBIZ at its annual "Financing Your Business Fair" today to present an overview of how the Authority has found success helping businesses to grow.

"The State EDA of New Jersey offers a broad range of financial assistance programs and services consistent with today's market demands, said Governor James E. McGreevey. New Jersey is committed toward enhancing a company's future success by providing the necessary tools. Through technical expertise and training, financial assistance, and real estate development support, the State is assisting to grow businesses and engage in job development."

EDA Executive Director Caren S. Franzini, who made the presentation to the crowd of nearly 100 members of the business community, provided an overview of EDA programs and gave examples of the Authority's success.

The EDA -- a self-supporting, independent state financing and development agency since 1974 -- has arranged for more than $15 billion in financing assistance and has helped nearly 8,000 different entities that have invested nearly $23 billion in New Jersey, creating an estimated 180,000-plus jobs in the process.

"This year alone, the Authority has provided more than $150 million to more than 260 different projects," said Franzini. "We work to put money in the hands of New Jersey businesses, money they may not have been able to obtain on their own. We often work in harmony with banks and other lenders and can mix and match our programs to meet business needs.

"One of top challenges for almost every entrepreneur is find the money to start and operate a business," she added, noting that one of EDA's affiliate organizations, the New Jersey Development Authority for Small Businesses, Minorities' and Women's Enterprises (NJDA), provides loans and loan guarantees from $20,000 to $200,000 for start up and micro businesses.

Since 2000, the NJDA has provided nearly $1.3 million in loans to 19 young businesses. One example is Touch Dynamics, Inc., of Elizabeth, a company that manufactures and sells book-size computers with small touch screens.

In September, the EDA closed on a five-year, $100,000 loan at 4% fixed interest to fund working capital. The loan is allowing the company to increase manufacturing volume and to hire the additional employees it needs to meet the demand for its product.

Franzini also noted that the Entrepreneurial Training Institute (ETI) is observing its 10th anniversary this year and is a major endeavor of the NJDA. ETI is an innovative eight-week program that is offered twice each year in the evenings at 10 locations throughout the state. Since 1992, about 700 people have graduated from the program, including a record 108 in June who completed the fall 2001 and Spring 2002 sessions.

Many ETI graduates move quickly ahead with successful business ventures. For example, noted Franzini, Noreen Cherry completed the spring 2000 class in Trenton and recently received a $50,000 line of credit for her chemical distribution company. Noreen, a chemist, worked for Mobil Oil before going out on her own.

Other EDA programs include:

Loans and loan guarantees from $50,000 to $2 million to small and medium size businesses through a variety of different programs. Up to $5 million is available when EDA works in conjunction with a bank through the Statewide Loan Pool for Business program.

The Business Employment Incentive Program (BEIP), where businesses creating at least 25 jobs in an Urban Aid community or a minimum of 75 jobs in a non-urban area are eligible. There have been 35 BEIP grants executed this year with companies planning to locate or expand in New Jersey. These grants have an estimated grant total of nearly $254 million. This is based on projections for the creation of 13,000 new jobs. The number pushes the total BEIP grant count since the program was started in 1996 over 300.

Since then, grants worth an estimated $700 million based on an estimated 75,000 new jobs being created in New Jersey have been executed with companies planning to invest $9.5 billion in the state's economy.

The EDA also manages the Corporation for Business Assistance in New Jersey (CBA) which is authorized by the Small Business Administration to process and approve applications under the federal 504 loan program. Under the 504 program, a business provides 10% of the equity. Another 50% is in the form of a bank loan and the remainder is provided through an SBA loan that is fully guaranteed by the federal government. The monies may be used for investments in buildings, equipment and other long-term depreciable assets.

The EDA also provides bond financing at below-market interest rates and on a longer-term basis for business and not-for-profit borrowers generally needing $1 million or more. The EDA is authorized to issue tax-exempt bonds under the federal Internal Revenue Code for certain qualified not- for-profit and for-profit entities. Bond purchasers do not have to pay federal or state income taxes on the interest earned. This savings is passed on to the borrower in the form of a lower interest rate. Last year, 66 businesses, not-for-profit groups and municipalities borrowed more than $720 million from the EDA to take advantage of the lower rates available through this program.

Legislation in 2000 gave the EDA responsibility for building and rebuilding public school facilities in 30 special needs Abbott districts, in districts that received 55% or more in state funding for education and in districts that are in level II state monitoring. This Fall, Governor McGreevey created the New Jersey Schools Construction Corporation as a separate subsidiary within the EDA in order to streamline and focus these efforts.

"Supporting the growth and development of small, minority and women-owned contracting and architectural businesses is a primary focus of the EDA and the State of New Jersey," said Franzini. "The school construction program is providing small firms with a myriad of opportunities for business and the EDA has taken steps to encourage and promote this participation by these small businesses."

Franzini noted that the EDA works closely with the Regional Alliance for Small Contractors in this effort.

"Our collaborative efforts with the Regional Alliance have also made project managers and their construction representatives more aware of the availability of qualified minority and women contractors."

For more information about EDA and its programs, visit www.njeda.com.