Apr 02

Federal CARES Act Update: State & Local Stabilization Fund

Posted on April 2, 2020 at 1:34 PM by Amy Spiezio

We are continuing our analysis of last week’s $2.2 Trillion CARES Act. 
$150 Billion State and Local Stabilization Fund – About $139 billion will be distributed to the states, for their own use (55%) and for redistribution to ‘qualifying’ local governments (45%). These funds can only be used to fund extraordinary costs caused by COVID-19. These must be costs over and above funding included in each entity’s current operating budget. They cannot be used to cover revenues not collected, as a result of the financial impact of the Coronavirus on taxpayers.
The State of New Jersey is slated to receive $3.444 billion. Of that total, a minimum of $1.894 billion is earmarked for State use. The balance, $1.550 billion, COULD be distributed to ‘qualifying’ local government.  
Questions regarding ‘qualified’ local governments have created uncertainty. Specifically, Section 601(d), provides: 
“A State, Tribal government, and unit of local government shall use the funds provided under a payment made under this section to cover only those costs of the State, Tribal government, or unit of local government that:
(1) are necessary expenditures incurred due to the public health emergency with respect to the Coronavirus Disease 2019 (COVID-19). 
And, Section 601(g)(2) of the CARES Act states:
“LOCAL GOVERNMENT—The term ‘unit of local government’ means a county, municipality, town, township, village, parish, borough, or other unit of general government below the State level with a population that exceeds 500,000.” 

The particular issue is whether the prepositional phrase “with a population that exceeds 500,000” modifies all the political subdivisions listed (a county, municipality, town, township, village, parish, borough, or other unit of general government below the State level) or modifies only the political subdivision immediately preceding it, “other unit of general government below the State level.” 
The issue is important because it determines which political subdivisions are entitled to receive direct funding under the Coronavirus Relief Fund in Section 601.
Our partners at the National League of Cities (NLC) have launched an effort to secure CARES Act funding for all COVID-19 impacted municipalities, regardless of size. NLC Executive Director Clarence Anthony has written to U.S. Treasurer Steve Mnuchin requesting a favorable interpretation of the new law.
Federal Departments and agencies are currently at work developing procedures for funding distributions and application advice for provisions subject to an application process. We will keep you posted.
For information on other components of this massive bill, see our March 25, 2020, CARES Act Preliminary Snapshot.
 -JM

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Mar 31

ABC Guidance on Executive Order 107

Posted on March 31, 2020 at 11:20 AM by Legislative Staff

Yesterday, the Division of Alcoholic Beverage Control (Division) issued guidance to the industry and law enforcement agencies clarifying acceptable operations during the Governor’s order.  The order outlines that:

  • Licensed establishments, bars, and restaurants, may stay open during normal business hours, but may only sell food and alcoholic beverage in original sealed containers from barrooms. For deliveries, they must get a transit insignia from the Division. No hard liquor or spirits can be sold after 10:00 p.m.
  • No retail consumption licensee may sell, serve or deliver alcoholic beverages for on-premise consumption.
  • All private and public social clubs must be closed to the public.
  • State concessionaire permits (or annual State permits) (“14 licensees”) must request permission to sell alcoholic beverages in original sealed containers for off-premises consumption. Requests for relief will be liberally construed during the duration of the public health emergency and will be granted on an expedited basis. A transit insignia from the Division or use an otherwise licensed entity authorized to transport alcoholic beverage must be obtained if such sales are permitted.
  • Holders of limited brewery licenses (“11”), restricted brewery licenses (“08”), plenary (“21”) and farm winery (“22”) licenses, craft distillery licenses ("07"), and cidery and meadery licenses ("02") are permitted to sell alcoholic beverages in original sealed containers from their tasting rooms for customer pick up during their posted normal business hours. Pickups should be arranged outside or adjacent to the premises. A transit insignia from the Division for use by an otherwise licensed entity authorized to transport alcoholic beverages must be obtained if such sales are permitted. Licensees must adhere to the quantity limitations set forth in N.J.S.A. 33:1-10 for off-premises distribution. No on-premise consumption is permitted.
  • Growlers and crowlers, for the purposes of the Governor’s Executive Order, will be considered original sealed containers, which may be sold for off-premises consumption by retail consumption licensees or breweries.
  • The Division has issued a Special Ruling Granting Relaxation of Schedule A, Paragraph 2Q) of the May 2019 Special Ruling, which authorizes Limited Breweries to make home deliveries of their products as provided therein.
  • Liquor stores acting as liquor stores are designated as essential retail businesses and may remain open during their normal business hours. Licensees must adhere to federal and state social distancing and disease prevention guidelines. Wherever practicable, licensees must provide pick up services outside or adjacent to their stores for goods ordered online or by phone. For deliveries, they must get a transit insignia from the Division.

In the event that State or local law enforcement orders the closure of licensed premises operating in violation of Executive Order No. 107, a police report of such closure must be forwarded to the ABC Enforcement Bureau for regulatory enforcement review.

Contact:  Lori Buckelew, Sr. Legislative Analyst, 609-695-3481 x112; lbuckelew@njlm.org

Mar 30

Grants and Loans for Small Businesses Now Available

Posted on March 30, 2020 at 11:29 AM by Legislative Staff

Late last week, the New Jersey Economic Development Authority (NJEDA) announced small business initiatives providing grants and loans for small businesses. The programs include:

Small Business Emergency Assistance: A total of $5 million available to small and medium-sized businesses and non-profits, with 1-10 full-time employees, to provide up to $5,000 as unrestricted payroll and working capital support. It cannot be used for any capital expenses, including construction.  The grant values are calculated at $1,000 per full-time employee. This grant is for retail, accommodations and food services, arts, entertainment and recreation, and other services defined with NAICS codes starting with 811 and 821. Home-based businesses are not eligible for this grant.

The business must have been negatively impacted by the COVID-19 declared state of emergency in Executive Order 103 (e.g., has been temporarily shut down, has been required to reduce hours, has had at least a 20% drop in revenue, has been materially impacted by employees who cannot work due to the outbreak, or has a supply chain that has materially been disrupted and therefore slowed firm-level production).

The focus of this round of funding is on the smallest enterprises in industries that are among the most adversely impacted by the COVID-19 containment measures. The goal of the grants is to try to preserve the ability for small businesses to support and maintain a workforce during this containment period that is as close to pre-outbreak levels as possible. Applications are anticipated to be opened during the week of March 30th. Completed applications will be considered on a first-come, first-serve rolling basis.

Small Business Emergency Assistance Loan Program: A total of $10 to million provide working capital loans up to $100,000 to businesses and non-profits, with less than $5 million in revenue, to cover operating expenses and ensure continuity of operations during the outbreak. The program will provide a 10-year term and amortization with 0% interest rate for the first 5 years and to EDA’s prevailing floor rate, capped at 3%, for years 6-10 with deferred repayments for 12 months.

This loan program is for businesses negatively impacted by the COVID-19 outbreak (including, but not limited to: reduction of business hours, complete closure of business, at least a 20% decline in revenue, employees unable to work, required to close by government, or disruption of supply chain).  Applications are targeted to open during the week of March 30th. Completed applications will be considered on a first-come, first-serve rolling basis.

Community Development Finance Institution (CDFI) Emergency Loan Loss Reserve Fund: A total of $10 million capital reserve fund providing low-interest working capital to micro-businesses to provide additional resources. Each loan cannot exceed $75,000 and the interest rate must be lower than 3.75% with flexible loan structures. The term of the loan cannot exceed 5 years.  Small Businesses and micro enterprises, some of which may not be able to secure traditional bank financing should reach out to their local CDFI for financing options.  If someone needs more information about their local CDFI please visit EDA’s Small Businesses Services.

CDFI Emergency Assistance Grant Program: A total of $1.25 million providing grants up to $250,000 to CDFI to support the scale-up of operations, technical support, and underwriting capacity of these CDFI, including hiring staff.  If someone needs more information about their local CDFI please visit EDA’s Small Businesses Services.

NJ Entrepreneur Guarantee Program: - A total of $5 million to encourage investment by encouraging private sector investors to provide additional working capital loans to NJ-based entrepreneurial businesses in which the investor is already an equity holder.  EDA will guarantee up to 80% of the total investment amount, not to exceed $200,000 per NJ entrepreneurial company. Applications will be accepted in the coming weeks. Completed applications will be considered on a first-come, first-serve rolling basis.

Small Business Emergency Assistance Guarantee Program: - a $10 million pilot program that makes available one-year first loss guarantees of permanent working capital loans and lines of credit originated by Premier Lender banks. These loans must be made to cover operating expenses for New Jersey small businesses and non-profit organizations that have been impacted by the COVID-19 outbreak.   The program provides a 50% guarantee, not to exceed a total EDA exposure of $100,000, for working capital loans or lines of credit to support business continuity for a range of COVID-19 related impacts to businesses (reduced revenue, employee shortage, supply chain impact, etc.). There are no EDA fees associated with applying for this program.   

Emergency Technical Assistance Program: a $150,000 program that will support technical assistance to NJ based companies applying for assistance through the US Small Businesses Administration. More information will be forthcoming over the next week and can be found on the state’s COVID-19 Information for New Jersey Business website.

Contact:  Lori Buckelew, Sr. Legislative Analyst, 609-695-3481 x112; lbuckelew@njlm.org