Cumberland Empowerment Zone Corporation
Financing Programs

The Cumberland Empowerment Zone Corporation (CEZC) currently administers several loan programs to benefit individuals and businesses throughout Cumberland County. They include a Micro Loan Program, a Business Loan Program, and a Section 108 Loan Program. Demand for CEZC loan products has been considerable.

Since its inception, the CEZC has provided loans totaling over $8.6 million. Over 50% of the total loans provided by the CEZC have been issued to women and minority-owned businesses. While CEZC programs are designed to be flexible to best meet the needs of individual projects and business, the general components of each program are described below:

In addition to the loan programs, the CEZC was allocated $130 million in Enterprise Facility bonds (EZ Bonds). The CEZC works with New Jersey Economic Development Authority to issue the bonds. EZ bonds are low-cost, tax-exempt bonds which can be used to finance qualified Zone property.

Micro Loan Program

  • Use of Funds: Funds may be used for inventory, supplies, furniture, fixtures, machinery, equipment, minor renovations and working capital. The funds cannot be used to refinance existing debt.
  • Loan Amounts: Under the Micro Loan Program, small businesses can borrow up to $35,000.
  • Borrower's Equity: A minimum of 10% is required; however, use of funds determines the amount required.
  • Rates and Terms: The interest rate is fixed and is set by the CEZC Board of Directors. There is a minimum term of seven years subject to the useful life of the asset.

The Micro Loan Program is most frequently used for small business start-ups and expansion. The CEZC program provides new businesses with the financial and technical assistance needed to give them the best opportunity for success. CEZC staff ameliorates the risk of these transactions through day-to-day interactions with its clients. Without CEZC financing, many of the new businesses located within the downtown regions of Bridgeton and Vineland would not exist.

In the case of new business start-ups, applications are evaluated on a realistic business plan. Micro loans for business expansions are based upon the history of the business and the realistic expectation that the expansion will generate additional profits.

Business Loan Program

  • Use of Funds: Funds may be used for the acquisition of land and buildings, new construction and site improvements, renovations, acquisition of machinery and equipment, and working capital. Working capital may be used for inventory financing, receivable financing, training and marketing financing.
  • Loan Amounts: Loan amounts may be up to 40% of the total project costs within target markets with a maximum loan amount of $250,000. The percent of CEZC funding is determined by the ability to utilize other public/private funding sources and the project's gap in financing. In addition to projects costs and funding sources, loan amounts are also based on the number of jobs created and the impact the project has on the community. The federal guideline of $25,000 per job created is utilized as a basis for this evaluation.
  • Borrower's Equity: Loan applicants are required to provide at least a 10% equity contribution to the project.
  • Rates and Terms: Interest rates are based on the structure of the financing and the EZ resident benefit. The interest rate is fixed and is set by the CEZC Board of Directors. The term is a five-year balloon with amortizations up to 25 years subject to the useful life of the asset, or fully amortized loans up to a maximum of 15 years.

Section 108 Loan Program

The Section 108 Loan Program was initiated by the CEZC for the specific purpose of servicing the townships and municipalities of Cumberland County outside the Empowerment Zone designated areas. The CEZC works with New Jersey Economic Development Authority in administering this program.

  • Eligible Borrowers: Private, for-profit businesses, for-profit developers and non-profits located in Cumberland County, excluding the cities of Bridgeton, Millville and Vineland.
  • Use of Funds: Acquisition of land and buildings; new construction, renovations, machinery, equipment and working capital.
  • Loan Amounts: $100,000 to $2,000,000 not exceeding the lesser of 40% total project costs or $25,000 per job created.
  • Rates and Terms: Interest rate is 200 basis points above the rate as quoted by HUD. Terms vary depending on use of funds. Working capital term up to seven years; equipment term up to 15 years or economic life, whichever is less; renovation and new construction term is up to 20 years.

Loan Application Process

Loan applications are available on-line and at the CEZC office. Applications are first reviewed and underwritten by CEZC staff. The CEZC Community Advisory Board reviews applications on a monthly basis. Recommendations are submitted to the Board of Directors each month, which is the group ultimately responsible for issuing a final decision on the application.

Criteria for Loan Evaluation

The CEZC has written Loan Policies and Procedures that set forth the loan evaluation process and criteria. Criteria for evaluation of loan applications include the following:

  • Resident Benefit
    • Number of EZ jobs created
    • Impact on neighborhood
  • Leveraged Funds
    • Private sector participation
    • Amount of gap
  • Credit History
  • Financial Capacity to Repay
  • Equity Contribution
  • Collateral
  • Cash Flow Needs (Structuring)

Bonding Program

  • No limitation on amount of EZ Bonds (subject to CEZC cap)
  • Project must add value to capital base of zone
  • Term cannot exceed 120% of average economic life assets
  • Up to 2% of bond proceeds can be used for closing costs
  • Must be for "Empowerment Zone business"
  • Must be for "qualified Zone property"

Empowerment Zone Business Requirements

  • 35% of employees must be residents of the Empowerment Zone (Business will receive up to $3,000 tax credit per year per employee, through 2009)
  • More than 50% of gross income must be from conduct of in the Zone business
  • Can be a branch or division of a larger corporation
  • A substantial portion of services performed must be in the conduct of in the Zone business
  • Cannot be a "prohibited facility":
    • Golf Course
    • Country Club
    • Massage Parlor
    • Gambling Facility
    • Health Club

Qualified Zone Property

  • Industrial, retail or commercial property
  • Must add value to capital base of the Zone
  • Must be "hard assets" (i.e. equipment, buildings, land)
  • Original Use - must be first time asset used within the Zone
  • Used equipment qualifies if not used in the Zone previously
  • Substantial renovation - if acquiring existing facility, renovations must be made in an amount greater than 15% of facility's cost
  • Must add to tax basis of property (improvements may not qualify)
  • Construction and renovation subject to AA and Prevailing Wage
  • Cannot refinance existing debt


Click on the EZ Locator to find out if you
are in the Zone:

 

Loan Application and
Monitoring Forms


Click below for a printable
Financing Programs Brochure