Bill Text: NJ S2473 | 2012-2013 | Regular Session | Introduced
Bill Title: Establishes small business loan guarantee program in EDA to support capital purchases and operating expenses and permits certain qualified businesses in regional centers to qualify for certain EDA loans.*
Spectrum: Partisan Bill (Democrat 8-0)
Status: (Engrossed - Dead) 2013-02-07 - Received in the Assembly without Reference, 2nd Reading [S2473 Detail]
Download: New_Jersey-2012-S2473-Introduced.html
Sponsored by:
Senator JIM WHELAN
District 2 (Atlantic)
Senator LINDA R. GREENSTEIN
District 14 (Mercer and Middlesex)
SYNOPSIS
Establishes small business loan guarantee program in EDA allowing certain small businesses to receive loan guarantees to support their capital purchases and operating expenses.
CURRENT VERSION OF TEXT
As introduced.
An Act establishing a small business loan guarantee program within the New Jersey Economic Development Authority, supplementing Title 34 of the Revised Statutes, and amending P.L.1974, c.80.
Be It Enacted by the Senate and General Assembly of the State of New Jersey:
1. (New section) a. The Legislature finds and declares that:
(1) The global economic decline caused by the Great Recession, that began in December 2007 and continues today, placed tight credit conditions on the availability of loans to small businesses from private financial institutions, impeding the expansion of small businesses, and thereby restricting their ability to improve the State's economy; and
(2) While the New Jersey Economic Development Authority offers loan and loan guarantee programs to assist small businesses, the strict criteria established for the authority's participation in guaranteeing loans should be broadened to take into account current economic and credit conditions. For example, according to the authority, since the establishment of its Main Street Business Assistance Program in January 2009 and continuing through October 2012, the authority guaranteed loans to only 29 small business projects.
b. The Legislature determines that it is in the public interest to establish a small business loan guarantee program to be implemented by the authority enabling the State to assist small businesses in making direct investments in their businesses to support capital purchases and operating expenses, including, but not limited to, employee training and salaries for new positions.
2. (New section) 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).
"Eligible small business" means a business entity that, at the time of application for participation in the small business loan guarantee program established pursuant to section 3 of P.L. , c. (C. ) (pending before the Legislature as this bill), is: a. independently owned and operated; b. organized for profit with a place of business located in this State; c. operated primarily within this State; d. employing less than 100 full-time employees; e. not dominant in its field; f. not raising, or has not raised, $10,000,000 or more in total equity financing; and g. not receiving, or has not received, $10,000,000 or more in financing from any source.
3. (New section) a. The authority shall establish and administer a small business loan guarantee program for the purpose of providing loan guarantees to eligible small businesses.
b. Loan guarantees of up to 100 percent of the value of the loan may be made to an eligible small business, provided that the total amount of all loans guaranteed under the small business loan guarantee program established pursuant to P.L. , c. (C. ) (pending before the Legislature as this bill) to any such business shall be greater than $25,000 but not to exceed $250,000. The loan guarantee funds may be applied to any aspect of the eligible small business that supports the businesses' capital purchases and operating expenses, including, but not limited to, employee training and salaries for new positions, as determined by the authority.
c. In order to receive a loan guarantee, a small business, at the time of application, shall provide proof that it is an eligible small business and shall enter into a loan guarantee agreement with the authority, which agreement shall provide that, within four calendar years after the date on which loan guarantee funds are disbursed to the business, the business, at the time of application, commits to increasing its full-time employment level by more than 10 percent or, if the business employs less than 10 employees, then by more than one full-time employee, whichever is greater.
d. The authority shall review and may approve applications for the small business loan guarantee program.
e. A business seeking to participate in the small business loan guarantee program shall submit an application in such form as the authority shall require. The application shall include any information the authority shall determine is necessary in consideration of the provisions of P.L.2011, c.123 (52:14B-21.1 et seq.).
f. A loan guarantee agreement entered into pursuant to subsection c. of this section shall provide that any loan guaranteed by the authority shall: (1) be for a loan having a current market interest rate as determined by the authority, if the eligible small business commits, under a loan guarantee agreement established pursuant to subsection c. of this section, at the time of application, to increasing its full-time employment level by more than 10 percent or, if the business employs less than 10 employees, then by more than one full-time employee, whichever is greater, in a period of time that is prescribed under subsection c. of this section; and (2) contain other terms and conditions considered appropriate by the authority that are consistent with the purposes of P.L. , c. (C. ) (pending before the Legislature as this bill) and with rules and regulations promulgated by the authority to implement P.L. , c. (C. ) (pending before the Legislature as this bill).
g. (1) Unless subject to federal law, rule, or regulation, each eligible business that receives a loan guarantee under P.L. , c. (C. ) (pending before the Legislature as this bill) shall undergo an audit, at its own expense, at least once every two calendar years. The authority shall designate an auditor to conduct the audit.
(2) If an audit is performed under a requirement of federal law, rule, or regulation, the authority shall waive the audit required in this subsection with respect to all issues addressed by the federally required audit report. However, the authority may require an audit of matters that are not, in the authority's judgment, addressed by the federally required report including, but not limited to, verification of compliance with requirements specific to the small business loan guarantee program, such as job-generation standards.
h. A loan guarantee agreement made pursuant to subsection c. of this section shall provide that any loan guaranteed by the authority shall be voided if the terms and conditions of the agreement are violated by the small business party to that loan guarantee agreement.
4. (New section) a. To implement the small business loan guarantee program established pursuant to P.L. , c. (C. ) (pending before the Legislature as this bill), the authority shall establish and maintain a special revolving fund to be known as the "Small Business Loan Guarantee Fund," which may be credited with:
(1) such moneys from the economic growth account of the "Economic Recovery Fund" established pursuant to section 3 of P.L.1992, c.16 (C.34:1B-7.12), as the authority determines are necessary to effectively implement the small business loan guarantee program based upon the response to the program;
(2) any moneys that shall be received by the authority from the repayment of the moneys in the "Small Business Loan Guarantee Fund" used to provide small business loan guarantees pursuant to P.L. , c. (C. ) (pending before the Legislature as this bill) and interest thereon;
(3) any moneys as may be available to the authority from business assistance programs administered by the authority or by other State agencies or authorities;
(4) appropriations made by the Legislature to effectuate the purposes of P.L. , c. (C. ) (pending before the Legislature as this bill);
(5) fees collected from applicants pursuant to subsection c. of this section; and
(6) other moneys made available including, but not limited to, funds provided by agreement with private investors, small business investment corporations, banks, and other lending institutions to effectuate the purposes of P.L. , c. (C. ) (pending before the Legislature as this bill).
b. Moneys in the "Small Business Loan Guarantee Fund," which are determined by the authority not to be needed for current responsibilities of the "Small Business Loan Guarantee Fund," may be invested by the authority in any direct obligations as to which the principal and interest thereof are guaranteed by the United States of America or any other obligation deemed appropriate by the authority. Income from the investment of moneys in the "Small Business Loan Guarantee Fund" shall be credited to the "Small Business Loan Guarantee Fund."
c. The authority may charge fees in connection with applications for participation in the small business loan guarantee program as it deems reasonable.
5. (New section) The authority may appoint a director to manage the activities associated with the "Small Business Loan Guarantee Fund" established pursuant to section 4 of P.L. , c. (C. ) (pending before the Legislature as this bill). The director shall receive compensation as determined by the authority.
6. (New section) The authority may adopt rules and regulations, pursuant to the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.), necessary to effectuate the purposes of P.L. , c. (C. ) (pending before the Legislature as this bill).
7. Section 5 of P.L.1974, c.80 (C.34:1B-5) is amended to read as follows:
5. The authority shall have the following powers:
a. To adopt bylaws for the regulation of its affairs and the conduct of its business;
b. To adopt and have a seal and to alter the same at pleasure;
c. To sue and be sued;
d. To acquire in the name of the authority by purchase or otherwise, on such terms and conditions and such manner as it may deem proper, or by the exercise of the power of eminent domain in the manner provided by the "Eminent Domain Act of 1971," P.L.1971, c.361 (C.20:3-1 et seq.), any lands or interests therein or other property which it may determine is reasonably necessary for any project; provided, however, that the authority in connection with any project shall not take by exercise of the power of eminent domain any real property except upon consent thereto given by resolution of the governing body of the municipality in which such real property is located; and provided further that the authority shall be limited in its exercise of the power of eminent domain in connection with any project in qualifying municipalities as defined under the provisions of P.L.1978, c.14 (C.52:27D-178 et seq.), or to municipalities which had a population, according to the latest federal decennial census, in excess of 10,000;
e. To enter into contracts with a person upon such terms and conditions as the authority shall determine to be reasonable, including, but not limited to, reimbursement for the planning, designing, financing, construction, reconstruction, improvement, equipping, furnishing, operation, and maintenance of the project and to pay or compromise any claims arising therefrom;
f. To establish and maintain reserve and insurance funds with respect to the financing of the project or the school facilities project and any project financed pursuant to the "Municipal Rehabilitation and Economic Recovery Act," P.L.2002, c.43 (C.52:27BBB-1 et al.);
g. To sell, convey, or lease to any person all or any portion of a project for such consideration and upon such terms as the authority may determine to be reasonable;
h. To mortgage, pledge, or assign or otherwise encumber all or any portion of a project, or revenues, whenever it shall find such action to be in furtherance of the purposes of this act, P.L.2000, c.72 (C.18A:7G-1 et al.), the "Municipal Rehabilitation and Economic Recovery Act," P.L.2002, c.43 (C.52:27BBB-1 et al.), P.L.2007, c.137 (C.52:18A-235 et al.), and sections 3 through 18 of P.L.2009, c.90 (C.52:27D-489c et al.);
i. To grant options to purchase or renew a lease for any of its projects on such terms as the authority may determine to be reasonable;
j. To contract for and to accept any gifts or grants or loans of funds or property or financial or other aid in any form from the United States of America or any agency or instrumentality thereof, or from the State or any agency, instrumentality or political subdivision thereof, or from any other source and to comply, subject to the provisions of P.L.1974, c.80 (C.34:1B-1 et seq.), section 6 of P.L.2001, c.401 (C.34:1B-4.1), P.L.2000, c.72 (C.18A:7G-1 et al.), the "Municipal Rehabilitation and Economic Recovery Act," P.L.2002, c.43 (C.52:27BBB-1 et al.), and P.L.2007, c.137 (C.52:18A-235 et al.), with the terms and conditions thereof;
k. In connection with any action undertaken by the authority in the performance of its duties and any application for assistance or commitments therefor and modifications thereof, to require and collect such fees and charges as the authority shall determine to be reasonable, including but not limited to fees and charges for the authority's administrative, organizational, insurance, operating, legal, and other expenses;
l. To adopt, amend and repeal regulations to carry out the provisions of P.L.1974, c.80 (C.34:1B-1 et seq.), section 6 of P.L.2001, c.401 (C.34:1B-4.1), P.L.2000, c.72 (C.18A:7G-1 et al.), the "Municipal Rehabilitation and Economic Recovery Act," P.L.2002, c.43 (C.52:27BBB-1 et al.), and P.L.2007, c.137 (C.52:18A-235 et al.);
m. To acquire, purchase, manage and operate, hold and dispose of real and personal property or interests therein, take assignments of rentals and leases and make and enter into all contracts, leases, agreements, and arrangements necessary or incidental to the performance of its duties;
n. To purchase, acquire, and take assignments of notes, mortgages, and other forms of security and evidences of indebtedness;
o. To purchase, acquire, attach, seize, accept, or take title to any project or school facilities project by conveyance or by foreclosure, and sell, lease, manage, or operate any project or school facilities project for a use specified in this act, P.L.2000, c.72 (C.18A:7G-1 et al.), the "Municipal Rehabilitation and Economic Recovery Act," P.L.2002, c.43 (C.52:27BBB-1 et al.), P.L.2007, c.137 (C.52:18A-235 et al.), and sections 3 through 18 of P.L.2009, c.90 (C.52:27D-489c et al.);
p. To borrow money and to issue bonds of the authority and to provide for the rights of the holders thereof, as provided in P.L.1974, c.80 (C.34:1B-1 et seq.), section 6 of P.L.2001, c.401 (C.34:1B-4.1), P.L.2000, c.72 (C.18A:7G-1 et al.), the "Municipal Rehabilitation and Economic Recovery Act," P.L.2002, c.43 (C.52:27BBB-1 et al.), P.L.2007, c.137 (C.52:18A-235 et al.), and sections 3 through 18 of P.L.2009, c.90 (C.52:27D-489c et al.);
q. To extend credit or make loans to any person for the planning, designing, acquiring, constructing, reconstructing, improving, equipping, and furnishing of a project or school facilities project, which credits or loans may be secured by loan and security agreements, mortgages, leases, and any other instruments, upon such terms and conditions as the authority shall deem reasonable, including provision for the establishment and maintenance of reserve and insurance funds, and to require the inclusion in any mortgage, lease, contract, loan, and security agreement or other instrument, of such provisions for the construction, use, operation and maintenance, and financing of a project or school facilities project as the authority may deem necessary or desirable;
r. To guarantee up to 90% of the amount of a loan to a person, if the proceeds of the loan are to be applied to the purchase and installation, in a building devoted to industrial or commercial purposes, or in an office building, of an energy improvement system; and to establish and maintain a small business loan guarantee program and a "Small Business Loan Guarantee Fund," to guarantee up to 100% of the amount of a loan to an eligible small business pursuant to sections 1 through 6 of P.L. , c. (C. ) (pending before the Legislature as this bill);
s. To employ consulting engineers, architects, attorneys, real estate counselors, appraisers, and such other consultants and employees as may be required in the judgment of the redevelopment utility to carry out the purposes of P.L.1974, c.80 (C.34:1B-1 et seq.), section 6 of P.L.2001, c.401 (C.34:1B-4.1), P.L.2000, c.72 (C.18A:7G-1 et al.), the "Municipal Rehabilitation and Economic Recovery Act," P.L.2002, c.43 (C.52:27BBB-1 et al.), P.L.2007, c.137 (C.52:18A-235 et al.), and sections 3 through 18 of P.L.2009, c.90 (C.52:27D-489c et al.), and to fix and pay their compensation from funds available to the redevelopment utility therefor, all without regard to the provisions of Title 11A of the New Jersey Statutes;
t. To do and perform any acts and things authorized by P.L.1974, c.80 (C.34:1B-1 et seq.), section 6 of P.L.2001, c.401 (C.34:1B-4.1), P.L.2000, c.72 (C.18A:7G-1 et al.), the "Municipal Rehabilitation and Economic Recovery Act," P.L.2002, c.43 (C.52:27BBB-1 et al.), P.L.2007, c.137 (C.52:18A-235 et al.), and sections 3 through 18 of P.L.2009, c.90 (C.52:27D-489c et al.), under, through or by means of its own officers, agents, and employees, or by contract with any person;
u. To procure insurance against any losses in connection with its property, operations or assets in such amounts and from such insurers as it deems desirable;
v. To do any and all things necessary or convenient to carry out its purposes and exercise the powers given and granted in P.L.1974, c.80 (C.34:1B-1 et seq.), section 6 of P.L.2001, c.401 (C.34:1B-4.1), P.L.2000, c.72 (C.18A:7G-1 et al.), the "Municipal Rehabilitation and Economic Recovery Act," P.L.2002, c.43 (C.52:27BBB-1 et al.), P.L.2007, c.137 (C.52:18A-235 et al.), and sections 3 through 18 of P.L.2009, c.90 (C.52:27D-489c et al.);
w. To construct, reconstruct, rehabilitate, improve, alter, equip, maintain or repair or provide for the construction, reconstruction, improvement, alteration, equipping or maintenance or repair of any development property and lot, award and enter into construction contracts, purchase orders, and other contracts with respect thereto, upon such terms and conditions as the authority shall determine to be reasonable, including, but not limited to, reimbursement for the planning, designing, financing, construction, reconstruction, improvement, equipping, furnishing, operation, and maintenance of any such development property and the settlement of any claims arising therefrom and the establishment and maintenance of reserve funds with respect to the financing of such development property;
x. When authorized by the governing body of a municipality exercising jurisdiction over an urban growth zone, to construct, cause to be constructed or to provide financial assistance to projects in an urban growth zone which shall be exempt from the terms and requirements of the land use ordinances and regulations, including, but not limited to, the master plan and zoning ordinances, of such municipality;
y. To enter into business employment incentive agreements as provided in the "Business Employment Incentive Program Act," P.L.1996, c.26 (C.34:1B-124 et al.);
z. To enter into agreements or contracts, execute instruments, and do and perform all acts or things necessary, convenient or desirable for the purposes of the redevelopment utility to carry out any power expressly provided pursuant to P.L.1974, c.80 (C.34:1B-1 et seq.), P.L.2000, c.72 (C.18A:7G-1 et al.), and P.L.2007, c.137 (C.52:18A-235 et al.), including, but not limited to, entering into contracts with the State Treasurer, the Commissioner of Education, districts, the New Jersey Schools Development Authority, and any other entity which may be required in order to carry out the provisions of P.L.2000, c.72 (C.18A:7G-1 et al.), P.L.2007, c.137 (C.52:18A-235 et al.), and sections 3 through 18 of P.L.2009, c.90 (C.52:27D-489c et al.);
aa. (Deleted by amendment, P.L.2007, c.137);
bb. To make and contract to make loans to local units to finance the cost of school facilities projects and to acquire and contract to acquire bonds, notes, or other obligations issued or to be issued by local units to evidence the loans, all in accordance with the provisions of P.L.2000, c.72 (C.18A:7G-1 et al.), and P.L.2007, c.137 (C.52:18A-235 et al.);
cc. Subject to any agreement with holders of its bonds issued to finance a project or school facilities project, obtain as security or to provide liquidity for payment of all or any part of the principal of and interest and premium on the bonds of the authority or for the purchase upon tender or otherwise of the bonds, lines of credit, letters of credit, reimbursement agreements, interest rate exchange agreements, currency exchange agreements, interest rate floors or caps, options, puts or calls to hedge payment, currency, rate, spread or similar exposure or similar agreements, float agreements, forward agreements, insurance contract, surety bond, commitment to purchase or sell bonds, purchase or sale agreement, or commitments or other contracts or agreements, and other security agreements or instruments in any amounts and upon any terms as the authority may determine and pay any fees and expenses required in connection therewith;
dd. To charge to and collect from local units, the State and any other person, any fees and charges in connection with the authority's actions undertaken with respect to school facilities projects, including, but not limited to, fees and charges for the authority's administrative, organization, insurance, operating and other expenses incident to the financing of school facilities projects;
ee. To make loans to refinance solid waste facility bonds through the issuance of bonds or other obligations and the execution of any agreements with counties or public authorities to effect the refunding or rescheduling of solid waste facility bonds, or otherwise provide for the payment of all or a portion of any series of solid waste facility bonds. Any county or public authority refunding or rescheduling its solid waste facility bonds pursuant to this subsection shall provide for the payment of not less than fifty percent of the aggregate debt service for the refunded or rescheduled debt of the particular county or public authority for the duration of the loan; except that, whenever the solid waste facility bonds to be refinanced were issued by a public authority and the county solid waste facility was utilized as a regional county solid waste facility, as designated in the respective adopted district solid waste management plans of the participating counties as approved by the department prior to November 10, 1997, and the utilization of the facility was established pursuant to tonnage obligations set forth in their respective interdistrict agreements, the public authority refunding or rescheduling its solid waste facility bonds pursuant to this subsection shall provide for the payment of a percentage of the aggregate debt service for the refunded or rescheduled debt of the public authority not to exceed the percentage of the specified tonnage obligation of the host county for the duration of the loan. Whenever the solid waste facility bonds are the obligation of a public authority, the relevant county shall execute a deficiency agreement with the authority, which shall provide that the county pledges to cover any shortfall and to pay deficiencies in scheduled repayment obligations of the public authority. All costs associated with the issuance of bonds pursuant to this subsection may be paid by the authority from the proceeds of these bonds. Any county or public authority is hereby authorized to enter into any agreement with the authority necessary, desirable or convenient to effectuate the provisions of this subsection.
The authority shall not issue bonds or other obligations to effect the refunding or rescheduling of solid waste facility bonds after December 31, 2002. The authority may refund its own bonds issued for the purposes herein at any time;
ff. To pool loans for any local government units that are refunding bonds and do and perform any and all acts or things necessary, convenient or desirable for the purpose of the authority to achieve more favorable interest rates and terms for those local governmental units;
gg. To finance projects approved by the board, provide staff support to the board, oversee and monitor progress on the part of the board in carrying out the revitalization, economic development and restoration projects authorized pursuant to the "Municipal Rehabilitation and Economic Recovery Act," P.L.2002, c.43 (C.52:27BBB-1 et al.) and otherwise fulfilling its responsibilities pursuant thereto;
hh. To offer financial assistance to qualified film production companies as provided in the "New Jersey Film Production Assistance Act," P.L.2003, c.182 (C.34:1B-178 et al.); and
ii. To finance or develop private or public parking facilities or structures, which may include the use of solar photovoltaic equipment, in municipalities qualified to receive State aid pursuant to the provisions of P.L.1978, c.14 (C.52:27D-178 et seq.) and municipalities that contain areas designated pursuant to P.L.1985, c.398 (C.52:18A-196 et al.) as Planning Area 1 (Metropolitan), Planning Area 2 (Suburban), or a town center, and to provide appropriate assistance, including but not limited to, extensions of credit, loans, and guarantees, to municipalities qualified to receive State aid pursuant to the provisions of P.L.1978, c.14 (C.52:27D-178 et seq.) and municipalities that contain areas designated pursuant to P.L.1985, c.398 (C.52:18A-196 et seq.) as Planning Area 1 (Metropolitan), Planning Area 2 (Suburban), or a town center, and their agencies and instrumentalities or to private entities whose projects are located in those municipalities, in order to facilitate the financing and development of parking facilities or structures in such municipalities. The authority may serve as the issuing agent of bonds to finance the undertaking of a project for the purposes of this subsection.
(cf: P.L.2010, c.28, s.3)
8. This act shall take effect immediately, but shall remain inoperative for 60 days following the date of enactment.
STATEMENT
This bill directs the New Jersey Economic Development Authority (authority) to establish a small business loan guarantee program (program) to provide loan guarantees of up to 100 percent of the value of the loan in amounts not less than $25,000 but not to exceed $250,000 to eligible small businesses, which may use the loan guarantee funds to support the businesses' capital purchases and operating expenses, including, but not limited to, employee training and salaries for new positions, as determined by the authority. An "eligible small business" is defined to mean a business entity that, at the time of application for participation in the program is: (1) independently owned and operated; (2) organized for profit with a place of business located in this State; (3) operated primarily within this State; (4) employing less than 100 full-time employees; (5) not dominant in its field; (6) not raising, or has not raised, $10,000,000 or more in total equity financing; and (7) not receiving, or has not received, $10,000,000 or more in financing from any source.
An eligible small business would enter into a small business loan guarantee agreement with the authority. Loan guarantees would be provided for loans having a current market interest rate as determined by the authority if the eligible small business commits to increasing its full-time employment level by more than 10 percent, or by one full-time employee for businesses employing less than 10 full-time employees at the time of application, whichever is greater, within four calendar years after the date on which the loan guarantee funds are disbursed to the business. Unless subject to federal law, rule, or regulation, each eligible small business that receives a loan guarantee under the bill shall undergo an audit, at its own expense, at least once every two calendar years. The authority shall designate an auditor to conduct the audit. Every loan guarantee agreement shall provide that any loan guaranteed by the authority shall be voided if the terms and conditions of the agreement are violated by the eligible small business party to that agreement.
To implement the program, the authority is directed to establish and maintain a special revolving fund to be known as the "Small Business Loan Guarantee Fund," which may be credited with: (1) such moneys from the economic growth account of the "Economic Recovery Fund" established pursuant to section 3 of P.L.1992, c.16 (C.34:1B-7.12), which the authority determines are necessary to effectively implement the program, within the limits of funding available from the Economic Recovery Fund, based upon the response to the program; (2) any moneys that shall be received by the authority from the repayment of the moneys in the "Small Business Loan Guarantee Fund" used to provide small business loan guarantees and interest thereon; (3) any moneys as may be available to the authority from business assistance programs administered by the authority or by other State agencies or authorities; (4) appropriations made by the Legislature; (5) fees collected from applicants and (6) other moneys made available including, but not limited to, funds provided by agreement with private investors, small business investment corporations, banks, and other lending institutions.
