Writer: Joshua Andino
2 min read March 2023— Silicon Valley Bank failed. New Jersey responded.
Starting on midday Friday and running over the course of the weekend, Silicon Valley Bank collapsed, leaving shareholders holding the bag and depositors breathing a sigh of relief that their funds would be guaranteed by the Federal Deposit Insurance Corporation (FDIC). While the Federal government worked to prevent the economic contagion from spreading, New Jersey was leading in its own way, and announced three economic programs from NJEDA meant to protect the state’s startups in its growing life sciences and technology sectors.
“Ensuring the success of New Jersey’s businesses is a vital component in building a stronger and fairer New Jersey economy,” said Gov. Phil Murphy in a Sunday press release. “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.”
NJEDA is reopening its Entrepreneur Support Program, launching its new Angel Match Program and scheduling a special board meeting to provide emergency liquidity for companies affected by SVB’s collapse. All three programs are designed to help companies meet payroll, pay rent and continue their day-to-day operations. The Angel Match program launched Monday, while the Entrepreneur Support Program will launch Wednesday, March 15.
The Angel Match program disburses funding from the State Small Business Credit Initiative, a federal program administered by the Treasury. Funded at $20 million, the program matches angel investors’ direct investment in early stage, product-based tech companies on a one-to-one basis from $100,000 to $500,000.
The Entrepreneur Support Program, with $5 million in funding, guarantees support to investors with the repayment of loans provided for working capital purposes. The program 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.”
Finally, and to be one of the main items discussed in the NJEDA board’s upcoming Friday meeting, will be the creation of a $10 million emergency liquidity facility that will review financial support requests for New Jersey-based companies with over $250,000 in deposits at SVB. The meeting will be via telephone, with the public encouraged to comment via the conference line available on the site.
Investors and business owners have in some cases already breathed a sigh of relief. In a separate interview with ROI-New Jersey, a New Jersey founder said, “I have to give full credit to the Governor’s Office and the (Economic Development Authority),” he said. “I’ll admit, I’ve been critical of them in the past, but, in this instance, they were on it from the beginning.” He added, “Other states weren’t doing anything…They were just watching. New Jersey was active — and I have to give them full credit for that.”
SVB was not the only bank to fail over the course of the weekend. New-York based Signature Bank also failed. On Monday, Gov. Murphy acknowledged the impact of the bank failures while touting the new programs designed to protect New Jersey Investors.
“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.” He added, “I’m proud that we can lead the pack in doing this.”
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