NJEDA Shuts Down Abused Business Loan

About a year ago the NJEDA shut down the Small Business Emergency Assistance Loan Program (Phase 2) due to “a high volume of applications,” which seems to be code for the massive fraud the program was attracting. Businesses were being encouraged to ‘double dip’ by a raft of boiler-room ‘grant consultants’. who were charging up to 15% of the awarded amount while hoping the understaffed agency would be too overwhelmed to prosecute every case.

‘Double dipping’ here refers to applying for reimbursement of employee costs incurred during the pandemic that had already been reimbursed under Phase One or a different pandemic program–which Phase Two of the program specifically prohibited. My company was approached by one of these consultancies but declined to work with them after reviewing their marketing materials, some of which directly contradicted the rules for the program. Besides explicitly ignoring the ‘no double dipping’ rule, these shady operators claimed that the business need not show negative impact from the pandemic, the exact opposite of what the program states.

Radio ads boasting of free government money for local businesses exploded across the market. The NJEDA saw the overwhelming response to the program, identified the fact that ineligible businesses were applying in massive numbers, and abruptly shut down the entire program. They say it may come back in a revised form.

Meanwhile any business buying the consultants’ line of BS would be on the hook for any fraudulent claims had they moved forward. Just like with taxes, the liability rests squarely on your shoulders once you sign the papers–so the shady consultants ultimately left small businesses holding the bag. Cancellation of the program appears to nullify pursuing prosecution of any fraudulent applications, or at least NJEDA is not pursuing any possible wrongdoers in this case at this time.

The moral of the story is that you must scrupulously adhere to any program’s terms and requirements and remember that you are ultimately responsible for what’s in your application, even if you were just following someone else’s advice. Just ask Wesley Snipes.

The other moral is to compare what you’re being told by a bounty-hungry consultant with what’s actually stated on the NJEDA website, which is very clear and detailed regarding program requirements. If the info differs, that consultant is setting you up, or at least willing to let you take the fall.

Share:

More Posts

NJEDA Budget Cuts Ahead

According to the President of the State Chamber of Commerce, the upcoming state budget announcement on February 25 will include drastic budget

New Website Features Q1 2025

We’re launching some new tools to streamline the work our Chamber and its Committees do. There’s a new Committees Overview page, and

MADROCKmusic.com Is OPEN

Chamber members The School of Rock – Carlstadt are proud to announce the opening of their online music supply store, MADROCK Music.com.

COMMITTEES: Join Us!

It’s not just the Year of the Snake in Rutherford, it’s also the Year of The Committee for our Chamber. Committees are

Send Us A Message