$50 Million for Main Street?

While TARP and the federal government’s $700 billion bail out package has been taking center stage on the national scene, some state governments, including New Jersey, are taking action to jump start and improve local economies. On October 27, 2008, the New Jersey State Assembly endorsed fifteen measures as part of the broad “New Jersey Economic Assistance and Recovery Plan” announced by Governor Corzine on October 18, 2008.

One of these measures is the “Main Street Business Alliance Program,” a proposal to appropriate $50 million to the New Jersey Economic Development Authority to provide guarantees and loans to small and mid-size businesses (Bill A-3377). The proposed bill was passed by the State Assembly and received in the State Senate on October 27, 2008, and reported favorably by the Senate Economic Growth Committee on November 13, 2008. The next step is for the bill to be voted on by the full Senate. The next Senate voting session is November 24.

If adopted into law, the bill will amend The New Jersey Economic Development Authority Act (N.J.S.A. 34:1B-1, et. seq.) in order to expand the purposes of the Economic Recovery Fund established pursuant to the Act. The sum of $50 million will be appropriated to the Economic Recovery Fund for the purpose of implementing the Main Street Business Alliance Program. Under the program, the New Jersey Economic Development Authority may use the $50 million:

“. . . to provide guarantees and loans to small and mid-size businesses and not-for-profit corporations on an expedited basis for a period not to exceed two years [from the date of enactment of the bill] to stimulate the economy.”

The New Jersey Economic Development Authority will have authority to adopt emergency rules and regulations to implement the program.

Assuming the bill becomes law, rules will then be promulgated by the New Jersey Economic Development Authority in order to identify the process for taking advantage of the program and the rules of eligibility. Given the limited amount appropriated to the fund, businesses looking to take advantage of the program will want to get their applications in quickly. The broad language of the bill should give the New Jersey Economic Development Authority wide latitude to implement a program that can be accessed efficiently and quickly so as to allow the additional funds to promptly benefit the local economy. For the time being, however, we will have to wait and see whether “main street” will receive an extra $50 million for economic stimulus.