The New Jersey Economic Development Authority went through more than a third of the $5 million pot of money meant to help keep afloat investments into startups that might otherwise fall through as businesses find their revenue drying up during the COVID-19 pandemic.
On Thursday, the NJEDA said it committed to back $810,000 of investments into five separate companies over the past month: Manalapan-based sports and fitness company iSport360, Allendale-based medical device company Acuitive Technologies, River Edge-based health care technology firm InquisitHealth, Voorhees-based medical technology company MAPay and Hoboken-based real estate technology company Reti360.
Under the NJ Entrepreneur Support Program eligibility is limited to businesses with less than 25 employees and up to $5 million in revenue. Loan guarantees are up to 80 percent, capped at $200,000 per startup, meaning the NJEDA would effectively use up to that amount as collateral against the loan.
The guarantees being sought are applied toward investments made after March 9, when Gov. Phil Murphy declared both a state of emergency and public health emergency, as the virus began to wash over New Jersey.
“Ensuring that investors continue to inject capital into New Jersey’s innovation community during the COVID-19 pandemic is pivotal to … creating the most diverse and inclusive innovation ecosystem and reclaiming the Garden State’s historic role as a leader in innovation,” Tim Sullivan, head of the NJEDA, said in a Thursday statement.
None of the guarantees reached the $200,000 backing outlined under the NJEDA program, though several came close, according to the agency’s activity report.
MAPay and Reti360, which both received $200,000, were each approved for $160,000 guarantees by the NJEDA.
Michael Dershem, the founder and chief executive officer of MAPay, said the state aid helped “young companies like ours to muscle through the COVID pandemic.”
“COVID-19 has created a volatile real estate market, so having the NJEDA guarantee a large part of investments into our company has been a tremendous asset as we speak with our investors,” Daniel Perlman, the founder and chief executive officer at Reti360, said in a Thursday statement.
All told, the state committed roughly $100 million toward NJEDA aid, much of it from the federal Coronavirus Aid, Relief and Economic Security Act.
The NJEDA has seen tens of thousands of applicants vie for an increasingly limited pool of funds for grants and loans meant to offer establishments a lifeline, as the pandemic and ensuing recession shatter commerce and business.
As of July 11, the NJEDA awarded or paid out nearly $24 million to 7,038 companies under a small business pandemic-relief grant program. And as of July 23, the state agency approved $4.7 million of its low-interest pandemic relief loans to 70 separate businesses, out of the $10 million the state Legislature approved.
Coming into the pandemic, state officials rolled out a variety of programs to take some of the financial uneasiness out of investor’s hands when considering which businesses endeavors to finance, so that they might gravitate toward New Jersey businesses.
One program, the Angel Investor Tax Credit, lets investors sell their tax credits for roughly 20 to 25 percent of the investments they make into budding technology and life-science startups.
Another incentive is the Net-Operating Loss tax credit program, meant to help companies offset the financial losses that inevitably come with research and development.
Technology and life science companies can sell the tax credits at 80 percent of their value, capped at $15 million per business, in order to stay afloat while sinking money into developing their product.