GNEC is a non-profit CDFI (Community Development Financial Institution). Our mission is to help the traditionally underserved small business entrepreneurs grow their businesses. We concentrate mostly in the areas of our state of NJ which have been historically underfunded and/or underserved.
GNEC provides ONLY small business loans. ALL our current loan programs offer a fixed-interest rate and for a certain term frame. That means interest rates will NOT rise throughout the term of the loan. We do NOT offer personal loans, loans for real estate, lines of credit, credit cards, etc. We provide funding for micro and smaller businesses with no more than $1.5 million in annual revenue and the purpose of the loan must be business-related.
Yes. We can provide business loansfor businesses that are just starting out. We do require,however, that the business owner(s) have a CURRENT source of income to help them qualify for the loan payments.It could be a job, social security payments, etc. We recommend that business owners maintain their jobs until the new business starts to pick up and the financial risks to repayment are reduced.
We will also need asound and detailed business plan along with future projections when a business is a start-up.We work with other CDFI’s that can help you prepare a business plan and business income projections if you do not have one yet.
Yes. GNEC does NOT provide funds for businesses in the industries of pornography, marijuana, or guns. And of course, we won’t fund any business dealing with any illegal products or services.
From time to time, there may be an industry or sector of the economy which we stop taking applications for. This can happen when too much of our lending funds are concentratedin one industry. GNEC attempts to always maintain our portfolio properly balanced. As of January 1, 2023, GNEC is no longeracceptingadditional loans in the Trucking/Transportation industry. We provided many loans for them throughout 2022 and the percentage of “Truck” loansin our portfolio has reached an amount higher than we would like for the moment.
GNEC receives grants and funding (directly or indirectly) from the State and Federal levels of government and from entities such as banks, insurance companies, philanthropists, and individual donors. Oftentimes, the “funder” (the entity providing the funds) will give us guidelines as to where and under what specific terms to lend out their funds. Our programs are created to help business owners obtain financing under the best possible terms. Funders may also provide funds to lower the interest rates on certain programs (subsidized rates). That is why many of our loan clients receive interest rates and terms which are much better than what the traditional business loan market place can offer.
NO! As you just read, GNEC receives grants and funding (directly or indirectly) from the State and Federal levels of government and from entities such as banks, insurance companies, philanthropists, and individual donors. Many renew their generous donations, but sometimes they can’t. ALL the specialty programs we have are subject to there being enough funding to implement them. We will continue to fund business owners with highly subsidized low-interest rates UNTIL the money runs out (if it does). We recommend that business owners apply and get through the process as quickly as possible.
Please be advised that due to the high volume of loan clients in our portfolio within the cosmetology, transportation, and food industries, we regret to inform you that we are temporarily limiting loan applications for businesses in these categories for the remainder of 2023. We apologize for any inconvenience this may cause and encourage you to explore our technical assistance to support your business.
Besides the loan amounts, there are two important differences between the DreamMaker loans and the Business Builder loans.
DreamMaker loans do NOT require a pledge of collateral as a guarantee for the loan. Business Builder loans (loans above $20,000) on the other hand, will require a pledge of collateral as a guarantee for the loan. As is typical to all business loans, all our GNEC loans (both the DreamMaker and Business Builder loans) will require UCC-1 filings and a personal guarantee of repayment. The difference between them here is the pledge of a specified collateral as a loan guarantee.
The other difference between our loan programs is how our approval process works. The decision to either approve or deny a DreamMaker loan ($1,000 to $20,000) is done “in-house”. Our Executive Director, Business Development Director, and both senior underwriters will be making the final decision as to whether approve or deny the loan request. If approved, we can then immediately schedule a closing date.
Business Builder loans (loans above $20,000) on the other hand, must go through an external credit committee to obtain the final approval. So, after we approve the loan in-house within GNEC, we must then take an additional step. We must set up an appointment with an external and independent credit committee to present all the details of the loan request. If the credit committee approves the loan with a majority decision, then we can proceed forward to schedule a closing date.
ALL loans over $20,000 (Business Builder loans) must be 100% collateralized by the pledged assets as a guarantee for the loan. The value given to the collateral will be 80% of its fair market value.
For example: If your business is purchasing equipment, the loan amount will be maxed out at 80% of the cost for the equipment. If you are pledging real estate, the amount of collateral equity available will be 80% of the value of the home minus any mortgage(s). So, a home worth $500,000 with a $350,000 mortgage will support up to a $50,000 loan. ($500,000 home value x 80% = $400,000, and then $400,000 – $350,000 mortgage = $50,000 left for collateral purposes)
No. All loans over $20,000 (the Business Builder loan program) require a pledge of collateral as a guarantee for the loan. Without proper collateral available or pledged, the loan limit will be $20,000 (DreamMaker loan program).
Absolutely not! NONE of our current loan programs have any penalties or extra costs of any kind for being paid early. A borrower can pay off the loan in full or send in extra money at any time without any kind of penalty.
$100 application fee for DreamMaker loans ($20,000 or less)
$250 application fee for Business Builder loans (over $20,000)
At the present moment (subject to change), GNEC is NOT charging the application fee upfront. We will collect it AFTER your loan has been approved and we are ready to go towards the closing. Therefore, if your loan is denied for any reason, you will NOT owe us any money. One more way we are determined to help the small business owner.
We have 2 loan programs available. Loan programs are determined by the size of the loan.
DreamMaker loans ($1,000 to $20,000) with terms typically between 4 and 5 years
Business Builder loans ($20,001 to $75,000) with terms typically between 5 and 6 years
Both of our loan programs have multiple “funding sources” we can select from (subject to qualifications). The funding source which will be used is dependent on the business location and other determining factors. It is the “funding source” (not the loan program) which will establish the interest rate of the loan.
Loan Program is determined by the loan amount. The loan program will determine if the approval decision can be made in-house (DreamMaker) or must a committee review it also (Business Builder). It will also determine whether a pledge of collateral is needed or not (for Business Builder-yes, for DreamMaker-no).
The Funding Source used will establish the rate and is determined by the location of the business and/or the demographics of the borrower.
The interest rate of the loan is determined by the Funding Source used. Oftentimes a borrower may qualify for multiple Funding Sources. For example: a woman entrepreneur whose business is in Newark qualifies for 2 Funding Sources. We will always provide the borrower with the most advantageous program available. (our “Entrepreneurs of Color Fund—Newark” at 3.50% in this case).
The term (length of the loan) is determined by the loan program. DreamMaker loans are typically amortized between 4-5 years and Business Builder loans are typically between 5-6 years.
Our goal is to always provide the best rate and terms for all businesses. If a business does not fit into one of our special funding sources, we can do the loan using our “GNEC General Fund” which has our standard rates and terms.
Our goal is to always fit you with the best loan terms possible. Below are our different funding sources in the order of best interest rates. Start at the top and see if you meet the criteria. If not, move on to the second one on the list. And so on.
This program is highly subsidized to assure a very low interest rate for businesses within the city of Newark (Newark ONLY, not for surrounding cities). Funds for this program are provided by Prudential Insurance Co and JP Morgan Chase. The rate in this program to the borrower is 3.50% fixed-rate. To qualify for this loan you must have your business address within the city of Newark AND you must be an entrepreneur of color (African-American, Hispanic, Asian, or other minority). The business CAN be a start-up business or a home-based business as long as it is within the city of Newark.
We receive funds from the state through NJEDA. These funds are allocated to help businesses in Opportunity Zones across the whole state of New Jersey. The rate when using this funding source will be 5.0%, and the term will have a 1-year moratorium. In other words, no payments will be required throughout the first year of the loan. You can receive your funds today to help your business grow and then start paying it back 1 year from now when your business is generating more revenue.
Here are the criteria to qualify for this funding source:
Business within an Opportunity Zone(Opportunity Zone map)Important: please check off the “Qualified Opportunity Zone” box on the left
Business must be established for at least 1 year (and have at least 1 tax return filed)
Business must have no more than 9 employees
Business cannot exceed $1.5 million in annual revenues
This funding source is provided for women entrepreneurs who do not have a business in Newark (3.5% rate) nor are located in opportunity zones (4.99% rate). The rate for loans using this funding source is 5.99%. It is still much lower than loans from traditional sources.
This funding source is provided for members of the LBGTQ+ community who do not have a business in Newark (3.5% rate) nor are located in opportunity zones (4.99% rate). The rate for loans using this funding source is 5.99%. It is still much lower than loans from traditional sources.
Made for businesses owned 51% or more by members of the LBGTQ+ community
This funding source is provided for business who are making “green energy” improvements to their business. It could be to help finalize the build or complete the purchase of an EV (electric vehicle). It could be to replace heating, electrical, etc. units to more efficient “green” units.
The business can be new or established. It could be anywhere within the state of NJ. The key qualification would be an environmental impact consideration. Underwriters will have final discretion as to what can be considered an environmental improvement for the business.
The interest rate on loans funded by the GNEC Green Fund is 5.99%
This funding source is provided for business owners who specialize in a “trade” within the housing, commercial property, or auto/trucking fields. Trades can include the following (and possibly others subject to underwriting approval):
The interest rates on loans funded by the GNEC Trade Fund is 5.99%.
You will always want to qualify under the most beneficial loan program which has the lowest rate and the best terms, of course. But surprisingly to many, the difference in monthly payments is often not too much. It all depends on the size of the loan. The difference in monthly payments becomes more noticeable as the loan amount increases. That’s why a difference of just 1% in the interest rate makes a big difference when obtaining a home mortgage where $400,000 or $500,000 is borrowed. As you will see the difference is not as dramatic when borrowing much less.
Feel free to use our loan calculator (on the “Resources” tab) to play with different amounts at different rates. Here is an example of $20,000 borrowed over 4 years using our different available funding sources:
$20,000 at 3.50% for 48 months (4 years) = $447.12
$20,000 at 4.99% for 48 months (4 years) = $460.50
$20,000 at 5.99% for 48 months (4 years) = $469.61
$20,000 at 7.99% for 48 months (4 years) = $488.16
$20,000 at 9.50% for 48 months (4 years) = $502.46
As you can see, when borrowing $20,000 over 4 years, the difference between 3.50% and 5.99% is a little over $20 per month. The difference between 5.99% and 9.5% is a little over $30 per month. Without any doubt, it’s extra money you rather not have to spend but definitely not a significant difference for the success of a business. The most important factor that should be considered is what can the $20,000 loan do for the business? Does putting this $20,000 to work help increase revenues and profits over time? And by how much?
Our application process is straight forward. The first thing you want to do is determine which loan program you would like to apply for (DreamMaker or Business Builder). Remember that Business Builder loans will require a pledge of collateral as a guarantee for the loan. If you do not have any collateral to pledge as a loan guarantee, you will need to apply for the DreamMaker loan (maximum $20,000). To find out the rate you will receive, please see “Q & A, About Our Loan Programs” for detailed qualifying criteria and information on each Funding Source available. If you have any doubt, please reach out to us and we can verify for you.
Choose the “Apply” link under the appropriate loan type and begin the application process. DreamMaker Loan ($1,000 to $20,000) or Business Maker Loan (over $20,000 and up to $75,000).
PLEAE NOTE: the online application link will always state a rate of 9.50%. This is NOT the rate you will receive if you qualify for a special funding source (please see next question below).
Our application is broken down into many small segments rather than one long continuous application. This makes it easier for us to provide feedback as you go and give you notes on every item requested. Each page/form of the application will have information (explaining in detail) what is needed. Please read the notes before submitting to make sure you are properly providing what is being requested.
As you submit the information, our underwriting team will look at it and mark it “complete”. You will receive a e-mail alerting you that it has been checked off. If there is anything missing or not correct, we they will send you an email letting you know what was wrong. Either way, you are informed every step of the process. We are here to assist you. Please allow us 24-48 hours (1-2 business days) to review and clear the items as you submit them.
BOTH our loan program applications are set at 9.50% as the default rate and for qualification purposes. But the actual rate of the program will be determined by the funding source used for your loan. See the questions and answers pertaining to our different funding sources to help you determine what you can qualify for. Please email us if you have any questions, and we will be happy to verify the rate you qualify for.
Yes. But because we can only offer 1 outstanding loan at a time, the borrower(s) will have to pay off any outstanding balance on their current GNEC loan. You will also need to wait 6 months and have a record of ALL on-time payments to be able to apply again for additional money.
In addition, GNEC is not designed to be your “go-to” lender. We have limited funds and are here to help businesses in that period before they can easily access money from traditional lending sources. Unless we get an exception approved, we will only provide 2 loans during the life of a business.
These are the documents that will always be needed for underwriting:
Last 3 years personal tax returns
Last 3 years business tax returns (or since company was formed if less than 3 years)
Last 12 months personal bank statements
Last 12 months business bank statements
These are the documents that MAY be needed for underwriting:
Business Plan and Financial Projections (for new businesses)
Paystubs (if working outside of the business)
Year-to-date Balance Sheet and Profit & Loss Statement
VERY IMPORTANT: Our application portal will provide you with details on each document that would be needed. Depending on whether your business is a start-up, the funding source, the loan program, etc. some items on the list may not be needed. It is important that you take a minute (before beginning) to read the information provided for each page of the application. If there are additional questions, please reach out to us.
You will have 30 days from the commencement of the application. We feel that business owners should possess a “can-do” attitude and should never procrastinate when it comes to their business. They should show resolve in getting things done as quickly as possible. Sometimes unexpected events happen to time schedules, but in general, 30 days is more than enough time to complete the application. We have had borrowers complete the whole application within a day and close within 2 weeks.
Loan applications that are inactive and have passed 1 month since opening will be sent to the archive files. If your file was archived and you wish to reopen your loan request, please let us know.
Any person who is an owner of 20% or more of the corporation must be part of the application process. This means that everything requested and required will pertain to them also. GNEC will need each owner’s permission to run their credit, their photo ID’s, their personal tax returns, etc.
Each page of the application has detailed instructions and lots of helpful information to help you as you fill out the application. PLEASE read the instructions on every page before commencing on that page; it will help you tremendously. If there is anything we have not covered or if you are unsure, please feel free to reach out to us right away. We are here to help.
Capacity shows the ability of the borrower(s) to be able to pay back the loan. It is calculated by taking all the income of the borrower(s) and dividing it by all their financial obligations (including the new proposed loan payments). A borrower may have substantial income but if their monthly obligations are substantial as well, it may show they don’t have the “capacity” to pay back the loan. Underwriters need to know and this is why they ask for documentation.
Most lenders would like to see a minimum ratio of 1.20 to 1.25 (Income/debt) so there is 20-25% of their income left over after paying all their obligations. The Small Business Administration (SBA) wants to see a minimum of 1.15 so at least 15% of the borrower(s)’ income is left over after paying off their obligations. GNEC is willing to come down to 1.00 “debt service ratio”. In other words, ALL of the borrower(s)’ income could be devoted to paying their obligations. This is VERY flexible compared to normal lending practices.
The borrower(s)’ credit history and FICO scores are VERY important to all lenders. Most lenders will require a minimum FICO score and if any borrower on the loan application is below that threshold, the loan will be automatically denied.
GNEC would prefer a minimum FICO score of 640, but we can be flexible, so it is not written in stone. What we don’t want to see is a history or track record of late payments scattered throughout the credit report. We also can NOT approve any borrower who has filed or been discharged of bankruptcy within the last 2 years.
Late payments will need an explanation. Sometimes life circumstances make things inevitable. That’s OK, as long as the explanation makes sense to our underwriters and the issues which caused the late payments have been resolved.
It is a “hard pull”. Any time a company pulls your credit report with your permission for the purposes of making a lending decision, it is considered a “hard pull”.It does affect your FICO scores but only minimally. And if you are shopping around for the best business loan rates, all the credit checks will be considered as only ONE “pull”as long asthey are all done within a short time frame from each other. The new FICO algorithmsrealize that you are shopping around, not trying to take on multiple loans simultaneously.
A pledge of collateral as a guarantee for the loan is required on ALL Business Builder loans (loans over $20,000). The Business Builder loans must be 100% collateralized. The value given to the collateral used as the loan guarantee will be set at 80% of its fair market value.
For example: If purchasing business equipment, the loan amount for the equipment will be no more than 80% of the cost. So, it the equipment being purchased costs $50,000, the most GNEC will lend against it is $40,000 (80% of the $50,000). If a borrower is pledging real estate as collateral, the amount that can be lent against it will be 80% of the value of the home minus the mortgage(s). So, a home worth $500,000 with a $350,000 mortgage will support up to a $50,000 loan ($500,000 x 80% = $400,000 and then, $400,000 – $350,000 mortgage = $50,000 maximum loan amount).
Character is a subjective judgment. We are not making any moral judgements on the borrower; only observing how they handle their business-related tasks. For example: a borrower who takes over 1 month to complete their application (without a good reason) may lead us to believe that they probably handle their business matters the same way and procrastinate on things that need to be taken care of. A borrower who does not follow instructions with their application process may lead us to believe they don’t pay attention to the details of their business.
We want to concentrate our efforts in helping those business owners who take their business very seriously and are motivated to get things done and figure things out. We get 100’s upon 100’s of applications every year and our funds and resources are limited. We will focus on those business owners who are focused and committed to building and growing their business.
Each time you submit a form or upload a document on the application portal, our underwriters will review them within 24 to 48 hours (oftentimes quicker but dependent on volume at the time). Once the underwriter reviews and marks the item as “complete”, you will receive an email letting you know. If there is an issue with what you submitted, you will receive an email letting you know as well.
Whenever you go online to your application account, you will see at a glance what items are still outstanding and which items are checked off as complete. Your goal is to complete the outstanding items as soon as possible so we can get your file into underwriting review as quickly as possible. Keep in mind, that anything you recently submitted may not be marked as “complete” yet. Please allow us 24 to 48 hours to review any document or form you have submitted.
Applications which have been completed (where everything requested has been submitted and marked-off as complete) are then underwritten and scheduled for an in-house review for the following week. These in-house reviews for an approval (or denial) take place each Tuesday for the applications that were completed and underwritten the week before.
For DreamMaker loans ($20,000 or less): If the loan request is approved on the Tuesday in-house review, the closing will be scheduled for Thursday of the following week.
For Business Builder loans (over $20,000 and up to $75,000): If the loan request is approved on Tuesday, the next step would be to schedule another loan review. This time with the external Credit Committee. If they approve the loan request, then we can schedule the closing for the following week’s Thursday. As you can see, Business Builder loans (loans over $20,000) take a little longer to close because of the added step of a Credit Committee appointment needed.
The amount of time it takes to close varies depending on:
The loan program (Business Builder loans take a week or two longer because we have to schedule a meeting with the external credit committee for final approval.
Volume of business during the time of application (more applications to review may equate to a longer turnaround time).
How long it takes for the borrower(s) to supply all the documents required to underwriting (the quicker we can review the documents, the quicker we can approve and close the loan). If you would like for your business to receive the money quickly, be sure to finish the application as quickly as possible.
Please Note: We cannot begin to underwrite a loan UNTIL we have ALL the required documents needed for review. Once we have received all the required documents for underwriting, we will work as quickly as possible to review the loan request and go into closing.
All closings take place on Thursdays at our office in Newark, NJ. The time of the closing will be scheduled by our closing department AFTER all closing conditions are submitted. You will receive an email from the closing department letting you know the time scheduled. If you have a preference in closing time (morning vs. afternoon), please let us know beforehand. We will do our best to accommodate.
There are always a few closing conditions requested before we can close. ALL conditions must be submitted by the end of Monday to confirm the Thursday closing date. If conditions are not met, the closing will need to be rescheduled for the following Thursday. These are the typical closing conditions (although on rare occasions, there may be more):
After you review and approve, please sign the commitment letter (which will outline the terms of the loan).
Pay the application fee (it is AFTER we approve the loan that we collect the application fee).
$100 for DreamMaker Loans ($20,000 or less)
$250 for Business Builder Loans (over $20,000)
We’ll need a “Voided” check from your business checking account. This will be used for the ACH draft (Automatic Clearing House). All monthly payments are due on the 1st of the month and are paid automatically through deductions from your business checking account.
Business Liability Insurance to list us as “Additional Insured” or “Loss Payee”. The wording will depend on whether we are taking collateral as a guarantee for the loan. We will provide you with the instructions for your insurance agent prior to the closing of the loan.
Yes. ALL businesses will be required to have Liability Insurance before we can close. As a business owner, this is something which is necessary regardless if you are applying for a loan or not. Liability Insurance protects a business from an unforeseen event or lawsuit. Keep in mind, even if a lawsuit against your business is frivolous, without Liability Insurance, you may need to hire an attorney and take time away from the business to settle the claim. We will send you simple instructions for you to forward to your insurance agent. Being that we are providing you a business loan, we just need to be listed on your policy.
The day of the closing, all the business owners (of 20% or more ownership) must be present to sign as borrower. Each borrower must bring in a government issued photo ID (Driver’s License or Passport). They must also bring in their Social Security Card (or ITIN documentation). They will need to provide the name, address and phone number of a relative NOT living with them for us to keep on file (in case we can’t reach you).
Yes, BOTH loan programs require a UCC-1 filing and a Personal Guarantee document to be signed. Business Builder loans will require a lien on specified collateral to be pledged as a guarantee for the loan.
All payments are due on the 1st of the month. If the closing takes place during the first half of the month (on the 15th or earlier), the first payment will begin on the 1st of the following month. If the closing takes place after the 15th of the month, the first payment will be made on the month after the following month (skip a month).
“Main Street Opportunity Zone” funded loans are different because of the 1-year moratorium on payments. The loan will have the first payment registered for the following month (regardless of the closing date), but no payments will be due throughout the first year. Mandatory payments will start on the 13th month after closing.
You will not need to write a check monthly. All payments will be made via ACH draft (Automatic Clearing House) on the 1st of every month. This is why we will require a “Void” check from your business account; to know which account we will use to automatically make your payments.
Absolutely yes. You can send additional money to every monthly payment or send a lump sum at any time. Any extra money (above the interest charge) will be applied to the principal balance you owe at the time. All you need to do is send us an email for confirmation, so we have your desire in writing. Our loans do NOT have any pre-payment penalties or charges of any sort.
Yes. ALL loan payments (whether made on time or late) will be reported to the credit agencies. Of all the “C’s” of lending, Credit is generally the MOST important when it comes to borrowing money. Making on-time payments will increase your credit score and credit worthiness over time. It will make much easier to obtain future loans. Unfortunately, making late payments will have the opposite effect. It will make it much harder to obtain additional money in the future for your business.
If you have a question that is not addressed here, please let us know. Email us at OVillares@GNEC.org, and we will answer itwithin 24 hours and perhaps add it to this list of Q&A’s.