The New Jersey Economic Development Authority (NJEDA) is accepting applications for its 2021 Net Operating Loss (NOL) Program through June 30. The program, which was recently expanded as part of the New Jersey Economic Recovery Act of 2020, enables early-stage technology and life sciences companies to sell their New Jersey net operating losses and unused research and development tax credits to unrelated profitable corporations for cash. Learn more at www.njeda.com/nol.
The capital raised through this program can be used for costs including, but not limited to, the expenses of fixed assets, such as the construction, acquisition and development of real estate; materials; start-up; tenant fit-out; working capital; salaries; and R&D expenditures. The program is jointly administered by the NJEDA and the New Jersey Department of Treasury’s Division of Taxation.
Since the program’s inception in the late 1990s more than $1.07 billion in funding has been distributed to more than 550 technology and life sciences companies. The average award in 2020 was $1.1 million.
The program also benefits the companies that buy the losses and unused tax credits. A profitable company can purchase tax credits at a discount, based on the market price at the time. These tax credits have traditionally traded somewhere between 88 and 94 cents on the dollar. Once purchased, the tax credits can then be applied to reduce the buyer’s state tax obligation.
The Economic Recovery Act increased the program’s annual cap from $60 million to $75 million and increased the lifetime cap for individual applicants from $15 million to $20 million.
“The NOL program plays an important role in achieving these goals by providing resources early-stage companies need to become profitable and prepare for long-term growth,” NJEDA CEO Tim Sullivan said in a statement. “The expanded program will support more companies that will contribute to New Jersey’s leadership in technology and life sciences innovation.”