NJEDA Opens 2022 Net Operating Loss Program Application
NJ Tech & Life Sciences Companies Can Now Apply to Sell Their
Net Operating Losses & Unused Research & Development Tax Credits for Cash
The New Jersey Economic Development Authority (NJEDA) announced that it has opened applications for the 2022 Technology Business Tax Certificate Transfer Program, commonly known as the Net Operating Loss (NOL) Program. Hailed as a lifeline for companies that have yet to reach profitability, the NOL Program enables early-stage technology and life sciences businesses in the Garden State to sell a percentage of their New Jersey net operating losses and unused research and development (R&D) tax credits to unrelated profitable corporations for cash. The NJEDA is accepting applications online through June 30, 2022 at http://www.njeda.com/nol.
Participants can use the capital raised through the NOL Program to help cover allowable costs incurred in connection with the operating their business such as salaries, R&D and other working capital expenditures. The NJEDA and the New Jersey Department of Treasury’s Division of Taxation jointly administer the program.
Since the program’s inception in the late 1990s, $1.126 billion in funding has been distributed to more than 570 technology and life sciences companies. The average award for companies approved to sell their net operating losses through the program in 2021 was $1.82 million.
The New Jersey Economic Recovery Act of 2020 (ERA), which Governor Phil Murphy signed into law last year, increased the program’s annual cap from $60 million to $75 million. It also increased the lifetime cap for an individual applicant from $15 million to $20 million.
Potential applicants interested in learning more should visit the program website, which covers the program’s eligibility requirements in detail. Companies are strongly encouraged to review the reference materials and watch the program review and application walk-through videos posted on the program’s website at http://www.njeda.com/nol.
In addition to being vital to emerging companies, the NOL Program also provides enormous benefits to the profitable companies that are buying the net operating losses and unused R&D 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. For example: a purchase of $1,000,000 of tax credit at 92 cents on the dollar would enable a buyer to decrease their New Jersey taxes payable by $1,000,000 for the price of $920,000, representing a savings of $80,000. Buyers can be publicly listed are on the NOL Program’s website, if they so choose. Entities interested in becoming a buyer through the NOL Program can visit the website http://www.njeda.com/nol or reach out via email to nol@njeda.com for more information.
To learn more about State resources available to New Jersey entrepreneurs and early-stage companies, visit https://www.njeda.com
