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(TRENTON) – Legislation Assembly Democrat Charles Mainor sponsored to create jobs and economic growth by promoting investment in small and minority- and women owned businesses was approved Thursday by the Assembly.
The bill (A-4343) establishes a Small Business and Minority Linked Deposit Program, under which money from the State of New Jersey Cash Management Fund would be deposited with eligible banks at rates 3 percent below the standard interest rate on a two-year certificate of deposit.
The bank would then makes loans equal to the amount deposited by the state treasurer to eligible small businesses and minority- and women-owned businesses at rates 3 percent below the standard loan rate offered by the bank.
“We cannot have a full economic recovery unless everyone is included,” said Mainor (D-Hudson). “Small and minority- and women-owned businesses need to be a part of our effort to create jobs, and this program would encourage investing in them to boost our economy. New Jersey is strong only if everyone stands strong, and this bill helps ensure that everyone is included.”
The program would be administered by the New Jersey Economic Development Authority in consultation with the state treasurer. The executive director of the EDA shall have final approval over loans after a bank has approved a loan through its standard approval process.
“The executive director will approve loans based upon the ability of the loans to generate jobs, improve the competitiveness and profitability of businesses receiving the loans and the significance of the loan to the business,” Mainor said. “It will be a fiscally responsible approach to job creation and economic development.”
Loans issued under this program must be offered at similar terms to those the lender offers to other borrowers with the exception of the lowered interest rate. In addition, no loan can be issued for more than $200,000. The lender and borrower can agree to any loan term but the reduced interest rate will only apply for the initial two years of the loan. In the event that the borrower defaults or renegotiates the loan, the state will not be held liable in any way and the state deposit backing the loan shall mature within 30 days of the default.
The bill still requires final legislative approval from the Senate.