New Jersey Business Financing
New Jersey is still in the process of fully rebounding from the 2008 Great Recession, however, thanks to small business throughout New Jersey, the local economy is seeing rapid improvement. By the end of 2015 in New Jersey, there were 820,303 small businesses, which is equivalent to 98.3 percent of all businesses in New Jersey. By the third quarter of 2015, New Jersey’s economy great at an annual rate of 1.5 percent. While this economic growth is slower than the overall United States growth rate of 1.9 percent, New Jersey’s economic annual growth rate was still better than previous years.
In addition to a fast growing small business economy, the state of New Jersey has seen employment growth. By the end of 2015, small businesses employed 1.7 million people, which is equivalent to 50.1 percent of the workers in New Jersey. According to the United States Bureau of Labor Statistics, the civilian labor force in February of 2017 was at an all time high in the past few years, with private sector employment increasing 1.9 percent in 2015.
In the state of New Jersey, small business demographics are broken down as followed:
- African American Owned – 5.5 percent
- Asian Owned – 20.9 percent
- Hawaiian or Pacific Islander Owned – 96.9 percent
- Hispanic Owned – 3.5 percent
- Native American or Alaskan Owned – 21.5 percent
- Minority Owned – 30 percent
- Non minority Owned – -5.3 percent
Challenges Faced by Small New Jersey Businesses
Things are looking up for businesses in the state of New Jersey in recent years, but there are still many challenges that are plaguing small and medium sized businesses in New Jersey. For starters, obtaining financing is very difficult and has become a troublesome process for most New Jersey business owners. Additionally, high taxes, strict regulations, and increasing costs of living add to the pressures mounting against small business owners in New Jersey. Some of the most common issues that New Jersey small business owners are facing today include:
- Obtaining Financing: Unless a small New Jersey business has a solid history of revenue, as well as net income, it can seem almost impossible to find financing options. Luckily, the state of New Jersey is working hard to make sure that small businesses are given equal opportunities to financing in order to thrive. Exploring some of the new options and programs that the state of New Jersey has to offer can be incredibly beneficial to any small business owner looking for financing options.
- Tax Regulations, Requirements, and High Rents: Small businesses in New Jersey are constantly faced with a web of tax rules and regulations, particularly when it comes to misclassification of an employee. Sales tax alone in New Jersey is at seven percent, which is the highest sales tax rate in the tri-state area (with New York having a sales tax rate of four percent and Pennsylvania at six percent). Many smaller businesses throughout New Jersey prefer to hire an independent contractor as it saves them money, but unfortunately, the government has started cracking down on misclassification issues. On top of those issues, the tax structures are high with complex regulations that make the tax environment unfriendly for small businesses in New Jersey. Surprisingly, New Jersey is one of the top three states with tax burdens being one of the major components in the costs of doing business, which ultimately hinders success from these vital small New Jersey businesses. In addition to an overwhelmingly complex and high tax system in New Jersey, the rent prices are consistently going up. Affording a store front space in New Jersey today can make or break a small New Jersey business. By consulting with a financial advisor and someone who knows the area well, some of these burdens can be alleviated.
- High Labor and Regulatory Costs: Similar to New York, New Jersey small businesses are grappling with increasing labor and regulation costs. In the end, these rising labor and regulation costs put more burdens on small business owners in New Jersey who are just starting out with their business ventures and do not have the necessary income to cover these expensive costs. Unfortunately, these high costs are not the last of New Jersey small business owner’s issues. The cost of living in general in New Jersey is rapidly increasing, which ultimately makes running a small business in the state incredibly difficult. Once again, most business owners in New Jersey highly recommend consulting with a financial professional to better understand how to manage these high costs, taxes, and regulations before making any permanent decisions that could cost a small business owner his or her business.
- Competition of Big Business: Big businesses are spreading throughout New Jersey, and are growing rapidly, thus greatly affecting all small business in New Jersey. With the evolution of big businesses throughout New Jersey, small business owners everywhere are struggling to figure out how to compete with the low costs and prices that big businesses can offer. This is where investing in effective content marketing campaigns can come in handy, as well as focusing on superior customer service. Through the use of financing options, many New Jersey small business owners can afford to train their employees to provide on of a kind customer service experiences, as well as funding vital marketing campaigns to remain competitive against big businesses in New Jersey.
New Jersey Business Financing Uses
Small businesses are thriving in New Jersey right now, even with the many challenges that are plaguing the state and making it more difficult for businesses to function. However, every business will experience business cycles that can lead to the need for alternative finance options. Having access to loan choices is already a struggle in the state of New Jersey, but there are plenty of programs in New Jersey to help bridge this gap. Some of the most common uses for business loans in New Jersey include:
- Purchasing a business
- Purchasing business real estate
- Refinancing a business loan
- Consolidating business debt
- Expansion, Upgrades, and Renovations
- Equipment Acquisitions
- Inventory Loans
- Marketing, Advertising, and Social Media
- Payroll and Hiring New Employees
- Working Capital Costs
New Jersey Cities We Provide Financing Assistance
- Newark
- Jersey City
- Paterson
- Elizabeth
- Toms River
- Clifton
- Trenton
- Camden
- Passaic
- Union City
- Bayonne
- East Orange
- Vineland
- New Brunswick
- Hoboken
- Lakewood
New Jersey Bank Loans
Ever since the financial crisis the availability of bank credit has been extremely hard for many New Jersey businesses to access. Unless you have outstanding credit and profitability the chances of obtaining bank-rate financing from a bank or credit union is difficult. But, if you are able to qualify for a New Jersey bank business loan, you will be getting the very best rates and terms available. Be prepared for a lengthy approval process, as getting a bank loan usually takes between 30-60 days.
New Jersey SBA Loans
SBA lending is the next best options for New Jersey businesses seeking bank-rate financing but are unable to get funded from their local bank or credit union. SBA loans aren’t provided by the Small Business Administration, but are instead offered by traditional and conventional business lenders. The difference between a SBA loan and other conventional business lending products is the fact that SBA loans are backstopped by the government. What this means is: if the borrower fails to repay their loan, the SBA lender won’t take a full loss, as the Small Business Administration agrees to cover a large portion of the SBA lender’s losses. By providing this assurance, the SBA looks to increase lending to small businesses.
Alternative New Jersey Business Loans
Alternative business loans are a way for New Jersey small businesses to get very affordable financing without the hassles they would have to experience with going through a bank or credit union. Fintech business lenders are able to provide loans ranging from 2-5 years with rates that begin in the high single digits, and can fund within a week of approval.
New Jersey Business Cash Advances
Its not easy to get approved for business financing these days through more conventional means. One way for a company to obtain much needed cash with a quick and easy process is for a company to sell a portion of their future revenue to a 3rd party for upfront cash. By getting a merchant cash advance the business owner is effectively getting paid months in advance for services yet rendered. While a cash advance may be very expensive, the process of obtaining one is painless, with approvals almost immediate and funding occuring within a day or two.
