Nobody is claiming an ethical high ground here, nor superior economic strategies. But New Jersey has managed to reach a method of government and banking cooperation that might be nationally envied. Federally, recession-straddled Americans have dealt with one administration that made it practically a party platform to give vast unmonitored sums to major financial institutions. Meanwhile its successor follows the same route, claiming that safeguarding against executive greed might be micromanaging.
In New Jersey, however, government is introducing several programs that seem to be unclogging the main arteries of credit. These and other angles of the recession dilemma will be examined in the Middlesex/Edison Chamber of Commerce’s Economic Crisis Forum on Tuesday, February 24, at 8 a.m. at the Pines Manor in Edison. Cost: $50. Visit www.mcrcc.org.
Representing the state government, the New Jersey Economic Development Authority’s CEO, Caren Franzini, explains several new state stimulus programs, PNC Bank’s vice president of business development, William McCoy, details its effect on banking credit. Other speakers include moderator Michael Cangemi, former CEO of the Aigner Group; Patrick Tremblay, accountant with RSM Gladrey; attorney Jeffery Rich with K&L Gates; and Michael Pappas, former congressman and director of the SBA.
PNC’s McCoy terms himself a 25-year seasoned banker who has witnessed a host of cycles in the commercial lending arena. A native of Sayerville, McCoy grew up under the tutelage of a public school teaching mother and a union man father. “ They were people faced with the realities of making a living,” says McCoy. Attending McGill University, he graduated with a bachelor’s in political science in 1983. He then entered Monmouth University, earning a master’s in business. Following his education McCoy donned the banking pinstripes and after several institutions has come to serve with PNC.
“We are trying to be proactive with the EDA and with our community,” he says. “Things do seem to be working again and we are soliciting borrowers.” McCoy’s, as well as all New Jersey’s banks, have several programs from which to draw their support. The EDA is managing more than $170 million in financial assistance packages, both direct and through the banking network.
“Early interest in these initiatives has been strong,” says the EDA’s Franzini, “and we expect this interest to grow as more businesses become familiar with the programs.” Visit www.njeda.com or call 800-537-7397 for information and online applications.
Main Street Initiative. Companies that have been operating for at least two years and meet other EDA size requirements, may qualify for either part of the $50 million Main Street Business Assistance Program. The first part is direct loan participation from the EDA. The second consists of EDA loan guarantees for borrowers working with its 14 preferred lenders, of which PNC is one.
For term loans secured by fixed assets, the EDA will directly provide 25 percent, up to $1 million, along with an up to 50 percent, $2 million maximum bank loan guarantee.
Working capital loans to cover operating expenses may qualify for a 25 percent, $750,000 maximum loan with a guarantee of 50 percent, for $1.5 million. These five-percent, five-year loans may be refinanced later at higher rates. Lines of credit may also be applied for up to a $250,000 limit.
InvestNJ. Nothing so stimulates the Garden State’s economy as putting its people to work. Thus, as part of it’s $120 million Invest NJ program the EDA offers employers a direct grant of $3,000 for any job created, filled, and retained for a full year. Many critics have scoffed at this seemingly pitiful offering as not making any real difference in hiring decisions. But most of the surge of applicants are saying that the extra financing allows them the ability to offer benefits and make their hiring competitive.
InvestNJ’s second aspect is a $70 million capital investment grant program. Here, companies may receive up to 7percent ($1 million cap) to fund direct use and operation of business expenses. Qualifying firms for either program must have two years of operation and five full time employees.
Banks ease up. Despite recent appearances to the contrary, banks are in the business of loaning money. So it is good news for the community and the lending institution itself to hear McCoy say that his doors are wide open and seeking borrowers. It means business is beginning to edge back toward usual. Yet he quickly admits that “usual” will not be the fast-money days that led us to our current plight.
He cites a few items that can help move loans forward. Foremost, if you have had past credit issues, get them out in the open. Lenders are digging much deeper, and they will not take it kindly if they must sweat and turn up skeletons that you have neglected to mention. Second, providing accurate projections in these precarious times, while difficult, still is essential. Estimates with several variables considered at least shows your honest intent and acumen.
Finally, detailing an industry analysis with the application has become more critical as markets are in high flux. Banks know that the old models they have employed for several industries no longer apply. They must count on borrower expertise to reestablish profiles.
Though some banks are cautiously hanging out the “open for lending” signs again and the state is selectively feeding well monitored cash back into the system, we remain far from fixed. Solutions are still unsure, greed still abounds in stimulus recipients, and the triggering foreclosure rates continue to climb. New Jersey will not sit isolated from this global recession.