Transcript Partnering with the EDA Feb. 4th 2010 Program for USHAA – www.ushaa.com Who We Are Independent, self-supporting finance and economic development agency dedicated to offering:  Financing.

Partnering with the EDA
Feb. 4th 2010
Program for USHAA – www.ushaa.com
Who We Are
Independent, self-supporting finance and economic development
agency dedicated to offering:

Financing Assistance

Access to Technical Assistance

Real Estate Development Assistance
Mission: To broaden New Jersey’s economic base by providing our customers
with the necessary financial and technical support to grow businesses, create
jobs, and renew communities
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Who We Are
Since 1974, we have provided over $19 billion to 9,600 projects in
New Jersey, resulting in the creation of an estimated 288,000 new
permanent jobs

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Our customers include:

Small- to mid-sized for-profit and nonprofit entities

Technology and life sciences companies
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Real estate developers
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Municipalities and other government entities

Traditional banks and community lenders
Commerce Transition
To more efficiently provide assistance to businesses in New
Jersey, many of the functions and duties previously belonging to
the New Jersey Commerce Commission will now be handled by
the EDA. This consolidation will create exciting new opportunities
for businesses in New Jersey.
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
The EDA expands with the addition of a new division engaged in key
business assistance, State marketing and international trade

New Jersey’s financing and economic development functions and
resources will be delivered and administered exclusively by EDA
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With the additional functions and resources, the business community will
benefit from a more cohesive experience – “one stop shopping” for all of
New Jersey’s financing and incentive programs
Key Benefits of Partnering with the EDA
When banks partner with the EDA, it is truly a win/win situation: the
bank keeps and satisfies the customer, while the customer receives
low-cost financing.
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Bank
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Maintains customer relationship
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Mitigates risk through EDA participation and/or guarantee
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1.10 DSCR
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Up to 100% LTV
The EDA takes a subordinated collateral position
Customer
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EDA’s DSCR and LTV requirements are less demanding
Grows business with low-cost financing
EDA Financing Resources
Statewide Loan Pool
Fast Start for small business
Bond Financing
Main Street NJ
Invest NJ
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Statewide Loan Pool
The EDA participates in bank loans to make the project viable for the bank and
affordable for the company. The key benefits are reduced risk and blended
interest rate.

Uses: Fixed assets or working capital

Eligibility: Any business that meets the following criteria:
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Located in a targeted municipality, or
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Operating in a targeted industry, and
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Creates one new job for every $50,000 of EDA assistance
Amount of Assistance:
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Fixed assets: Up to $1.25 million loan/$1.5 million guarantee: Total of $2.75 million
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Working capital: Up to $750,000 loan/$1.5 million guarantee: Total of $2.25 million
Interest Rates: Fixed and variable rates are available

Fixed rate is typically indexed to 5-year Treasury rate, plus 0 to 1.5% depending on a
scoring formula, with a current floor of 3%

Variable is indexed to Prime Rate, minus 1 to 4% depending on a scoring formula,
with a current floor of 2%
Fast Start for small business
The Fast Start for small business program offers an expedited approval process on
financing for small businesses that have been in business from one to three
years. The key benefit is that the EDA provides the financing, while the bank
keeps the deposits from the customer.

Uses: Business expenses not related to rent, capital construction, utilities or other indirect
costs
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Eligibility:
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Business must be in operation for at least one year
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The EDA places a particular emphasis on creditworthiness, cash flow, and collateral
Amount of Assistance:
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Up to $300,000 for credit scores greater than or equal to 700
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Up to $125,000 for credit scores greater than or equal to 650
Interest Rates: Fixed and variable rates are available

Fixed rate is typically indexed to 5-year Treasury rate, plus 0 to 1.5% depending on a
scoring formula, with a current floor of 3%

Variable is indexed to Prime Rate, minus 1 to 4% depending on a scoring
formula, with a current floor of 2%
Bond Financing
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Eligibility:
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Tax-exempt bonds are available to manufacturers and nonprofits and for
certain exempt facilities.
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$20 million capital expenditure limit for manufacturers (3 years back and 3
years forward)
Uses:

Fixed assets, working capital, and refinancing for non-profits
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Fixed assets (land/buildings and new equipment) for manufacturers
Amount:
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$500,000 with no dollar limit on tax-exempt bonds for nonprofits
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$500,000 to $10,000,000 on tax-exempt bonds for manufacturers
Interest Rates:
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The bank sets the interest rate, terms and other financial conditions
Main Street Assistance Program
• $50 million fund deployed to assist eligible businesses
in three ways:
- Loan Participations
*Up to $1 million per total transaction for fixed assets; up to $750,000 for working capital,
with EDA loan participation not to exceed 25% of total transaction
*Fixed 5-percent interest rate
*Collateral subordinate to the bank
*Total EDA exposure can not exceed $2 million or 50% of bank transaction
- Loan Guarantees
*Up to $2 million guarantee on a term loan for fixed assets; up to $1.5 million guarantee
on a term loan for working capital (guarantee must be less than 50% of total
transaction)
- Lines of Credit Guarantees
*Up to $250,000 guarantee on a line of credit (guarantee must be less than 50% of total
transaction and is available through EDA’s Preferred Lenders only)
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Main Street Business Assistance Program
Terms/Conditions
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5% fixed interest rate on EDA portion
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Maximum term of 5 years; amortizations may be longer
Personal guarantees required for any person or entity with 10% of more
ownership in applicant/operating company
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1.1X debt service coverage ratio
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Based on 2 most current years of financial statements
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Global debt service can be used
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DSCR defined as net income plus interest, depreciation & amortization minus owner
distributions (plus add back in rent if rent will be replaced by loan payment) divided
by principal and interest payments on existing debt plus new debt
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Collateral required for all loan participations and guarantees
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LTV not to exceed 100%
Main Street Assistance Program
Eligibility
• Business must be located in NJ and in business for at
least 2 years
• In good standing with EDA, federal/state agencies and
requesting bank
• No bankruptcy within the past 7 years or criminal history
• Minimum credit score of 680 for at least one of the
guarantors
• Business should maintain jobs in NJ
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Partnership Success Stories
Tony Pallet
Egg Harbor Township Ace Hardware
McLean Packaging
St. Philip’s Academy
Jezek Tool and Machine Company
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Tony Pallet
A Newark-based manufacturer and recycler of pallets

$192,942 bank loan with 25% EDA
guarantee of $48,235.50
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5.10% fixed; 5-year term; 10-year
amortization
Funding was used to acquire
equipment, including a new wood
grinder that reduces the cost of scrap
wood disposal and a new kiln to treat
pallets used in export
“The entire process was very smooth and I
would definitely do business with the EDA
again.”
-President Vera Russo
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Egg Harbor Township Ace Hardware
One of five family-owned Ace Hardware retail stores in Atlantic County
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
$650,000 bank loan with 25% EDA
participation of $162,500 and 30% EDA
guarantee of $146,250
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Loan terms: floating rate equal to
WSJ Prime + 1%; 6-month interest
only, followed by 9.5 years of
monthly payments plus interest (call
option at year 5)
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Participation terms: 5.48%; 6-month
interest only, followed by 9.5-year
amortization, 5-year term
Funding was used for equipment and
inventory
“The EDA assistance made our expansion work
when no banks were willing to work with our
whole project. The procedure was no problem
thanks to the great staff and the minimal
paperwork.”
-Owner Joseph Smith
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McLean Packaging
A Newark-based manufacturer and recycler of pallets
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The EDA issued a $10,000,00 taxexempt bond, which was directly
purchased by a bank
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Loan terms: variable rate equal to
the tax-free equivalent of the 30day LIBOR plus 150 bps; 20-year
term
Funding was used to acquire
manufacturing equipment
“Working with the EDA was a seamless
process, and we would not have made the
move into New Jersey without their assistance.”
-President Joe Fenkel
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St. Philip’s Academy
A Newark-based nonprofit elementary and middle school in the Episcopal tradition

The EDA issued an $11,285,000 taxexempt bond, which was directly
purchased by an investment
corporation
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Loan terms: 4.29%; 25 years
Funding was used to acquire,
renovate, and expand facilities to
accommodate increased enrollment
“You could tell that the EDA understood that our
business is educating kids. They were there to
help us through the whole process and answer
any questions we had. It’s safe to say that I
would love to continue to work with the EDA.”
-Thomas H. Hooper, Director of Institutional
Advancement
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Jezek Tool and Machine Company
An Elizabeth-based precision machine shop and manufacturer of precision metal and plastic parts
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$550,000 bank loan with a 25% EDA
guarantee of $137,500
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$255,000 bank with a 25% EDA
guarantee of $63,750
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4.75% fixed; 5-year term, 20-year
amortization
4.75% fixed; 10-year term, 10-year
amortization (call option at end of
year 5)
Funding was used for the refinancing of
equipment and real estate
“Before we refinanced our equipment and
facility, we were locked into a loan with a
much higher interest rate. My company
would not have been able to receive the
financing with PNC Bank at that time without
the EDA’s assistance.”
-Owner Al Muschiatti
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QUESTIONS?
COMMENTS?
New Jersey Economic Development Authority
609-777-4898
www.njeda.com
For more information about doing business in New Jersey visit www.newjerseybusiness.gov or call 866-534-7789
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