On March 10, Silicon Valley Bank (SVB), a commercial bank headquartered in Santa Clara, California, collapsed after a bank run on its deposits in the secont-largest bank failure in United States history. With many New Jersey-based companies banked by SVB, Governor Phil Murphy announced on Sunday the establishment of emergency assistance from the New Jersey Economic Development Authority (NJEDA).
According to the NJEDA press release, this package of assistance includes the reopening of the NJEDA’s Entrepreneur Support Program, the launch of the NJEDA’s Angel Match Program and the scheduling of a special board meeting for consideration of an emergency liquidity facility. All programs will provide necessary financial support for companies experiencing liquidity challenges due to the SVB collapse and are designed to help companies meet payroll, pay rent and continue their day-to-day operations.
“Ensuring the success of New Jersey’s businesses is a vital component in building a stronger and fairer New Jersey economy,” said Governor Murphy in a statement. “Now, more than ever, it is essential that our state supports companies that contribute to our economy, innovation ecosystem and the dynamism of our cities. By offering a suite of programs for New Jersey entrepreneurs impacted by the SVB collapse, we will continue to keep residents employed and support companies that are vital to our innovation ecosystem.”
The total funding from these emergency assistance programs is $35 million, with $5 million allocated to the Entrepreneur Support Program, $20 million to the Angel Match Program and consideration of a $10 million emergency liquidity facility.
- The Entrepreneur Support Program offers a guarantee to support repayment of an investor loan advanced for working capital purposes and is designed to encourage investors to support businesses within their portfolios during this liquidity crisis when investor support is particularly crucial. It provides an NJEDA guarantee of up to 80 percent for an eligible new loan or convertible note by a qualified investor into a New Jersey qualified business, not to exceed a $200,000 guarantee per company.
- The Angel Match Program will help early-stage businesses bridge funding gaps as they scale their operations and refine their products. The program, which will match up to $500,000 in direct investments, is designed to fuel the growth of early-stage companies while increasing the pool of available capital, stimulating further investments into New Jersey’s innovation ecosystem. The funding may be used for product development, marketing, research and development, and other working capital needs. This will extend the capital support from investors during this time of uncertain banking resources.
- The board will meet to consider an emergency liquidity facility that will review financial support requests for New Jersey-based companies with over $250,000 in deposits at SVB. This product is anticipated to support impacted companies with a loan of up to $500,000 to provide short-term financing options for at most 12 months. The Authority’s board will consider the program approval at a board meeting to be scheduled in the coming week. Further details will be announced prior to the board meeting.
Program information is available at https://www.njeda.com/.
