NJEDA accepting applications for 2021 Net Operating Loss Program

The New Jersey Economic Development Authority is accepting applications for its recently expanded 2021 Net Operating Loss Program, May 6 to June 30.

The NOL Program 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.

Capital raised through this program can be used for costs including 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 NJEDA jointly administers the program with the New Jersey Department of Treasury’s Division of Taxation.

An informational webinar about the NOL Program will be held on May 18 at 12 p.m. to review eligibility requirements with potential applicants. Registry is available online, and a recorded version will be made available on the NJEDA’s webpage following the event.

Since the program’s inception more than 20 years ago, more than $1.07 billion in funding has been distributed to over 550 technology and life sciences companies.

The average award for companies approved to sell their net operating losses through the program in 2020 was $1.1 million.

The program was expanded in January through the New Jersey Economic Recovery Act of 2020, which  increased the program’s annual cap from $60 million to $75 million and increased the lifetime cap for an individual applicant from $15 million to $20 million.

“Governor Murphy is committed to making New Jersey the State of Innovation with the most diverse and inclusive innovation ecosystem the nation,” said NJEDA Chief Executive Officer Tim Sullivan in a prepared statement. “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. The expanded program, which is now available, will support more companies that will contribute to New Jersey’s leadership in technology and life sciences innovation.”

For the profitable companies buying the net operating losses and unused R&D tax credits, the tax credits can then be applied to reduce the buyer’s state tax obligation.