New Jersey's Real Estate Gap Financing Grant Program: FAQs

The New Jersey Economic Development Authority (NJEDA) has introduced an initiative to bolster economic recovery and revitalization in distressed municipalities: the Real Estate Gap Financing Grant Program.

This program, established to address the negative economic impacts of the COVID-19 pandemic, offers crucial financial support to real estate development projects that require gap financing.

What is the New Jersey Real Estate Gap Financing Grant Program?

The Real Estate Gap Financing Grant Program is a $10 million pilot initiative funded by the American Rescue Plan State and Local Fiscal Recovery Funds. It aims to provide grants of up to 50% of total eligible project costs, with a minimum grant of $500,000 and a maximum of $5 million per project.

Program applicants must meet the following specific requirements:

• Applicants must agree to a 5-year deed restriction, ensuring no change in the proposed project use for 5 years.
• Applicants must be in substantial-good standing with the New Jersey Department of Labor and Workforce Development, New Jersey Department of Environmental Protection, and NJEDA prior to approval.
• Applicants must provide a current tax clearance certificate at application to demonstrate that the applicant is in good standing with the New Jersey Division of Taxation, unless the applicant is not required to register with the Division of Taxation.

Who is Eligible to Apply for the NJEDA Gap Financing Program?

To qualify for this grant program, real estate projects must also meet specific criteria.

Eligible projects:

• Must be located within one of 25 designated distressed municipalities in New Jersey
•  Include commercial/office, supermarkets/grocery stores, manufacturing, non-profit/community use (excluding government-owned), cultural arts, performing arts, and mixed-use developments.
• Must demonstrate a clear need for gap financing, indicating a funding shortfall that hinders project completion.
• Should have the potential to create jobs, stimulate economic activity, and positively impact the local community.
• Will be subject to compliance with the New Jersey prevailing wage.

Projects that have started construction are not eligible. Construction, including demolition and remediation, cannot start until EDA approves the application.

What is the Application Process and Deadline?

The Real Estate Gap Financing Grant Program application process is competitive. Interested applicants must submit a comprehensive application that includes detailed project information, financial projections, and supporting documentation.

The deadline for submitting applications is January 8, 2025.

What is Gap Financing and Why is it Important?

Gap financing is critical in bridging the funding gap between traditional financing sources, such as loans and equity investments, and the total project cost. This type of funding is essential for projects that conventional financing options may not fully support due to risk, market conditions, or project complexity.

How Can This Program Benefit Distressed Municipalities?

The Real Estate Gap Financing Grant Program is a significant step towards revitalizing distressed municipalities in New Jersey. By providing essential funding for real estate development projects, the program can:

• Create Jobs: Stimulate economic activity and new job opportunities for residents.
• Attract Investment: Encourage private investment in distressed areas, leading to increased property values and improved infrastructure.
• Enhance Quality of Life: Provide residents with access to essential services, amenities, and affordable housing to improve their quality of life.
• Promote Community Development: Foster community development and revitalization efforts, leading to a more vibrant and sustainable future.

Getting Started

The New Jersey Real Estate Gap Financing Grant Program offers real estate developers and community leaders a unique opportunity to revitalize distressed municipalities. By providing critical gap financing, the program can unlock these areas' potential and drive economic growth.

Do you need help assessing if the New Jersey Real Estate Gap Financing Grant Program is right for your organization? Contact us today to find out how we can assist.