Lakewood UEZ Sets New Rules on Loan Forgiveness

Lakewood businesses with Urban Enterprise Zone expansion loans face new limits on loan forgiveness when payments are late, according to a policy reported Tuesday by The Lakewood Scoop.

The report says the Lakewood Development Corporation policy treats a payment more than 30 days late as a default and suspends forgiveness under the UEZ Business Low-Cost Expansion Loan program. The program offers partial forgiveness when a business creates qualifying full-time jobs.

Making up a late payment does not immediately restore that benefit. After a first default, a borrower must make three consecutive on-time monthly payments before forgiveness resumes, the report says. After a second default, the requirement rises to six consecutive on-time payments.

A third default, or a payment more than 90 days late, ends eligibility for forgiveness unless the LDC board grants an exception for documented hardship or a payment-processing error, according to the report.

The Scoop reports that forgiveness amounts remain 50% of the remaining principal, capped at $25,000, for two new full-time employees, or 25%, capped at $12,500, for one. Interest, late charges and legal fees are not forgiven, and borrowers must meet the requirements within the original five-year loan term.

The policy applies to new loans. Whether it can apply to existing loans will be reviewed by LDC counsel, and the policy does not automatically alter existing loan agreements, the report says. Existing borrowers should not assume their signed terms have changed.

The details of the new default policy above come from The Lakewood Scoop's report. A current township resolution confirming the full new policy was not independently available for this report. Older program descriptions should not be treated as confirmation of the newly reported terms. Businesses should check their own loan documents and speak with the UEZ office about their account before relying on a forgiveness amount or deadline.