Net Operating Loss Program Application Deadline Approaching

On Sep 4, 2020

The New Jersey Economic Development Authority reminded emerging technology and life sciences companies in the Garden State that they have until Sept. 30 to apply to the state’s 2020 Technology Business Tax Certificate Transfer Program, better known as the Net Operating Loss (NOL) Program.

Through the NOL Program, New Jersey businesses can apply to sell their net operating losses and/or unused research and development (R&D) tax credits in exchange for non-dilutive cash. Heralded as a lifeline for companies that have not yet reached profitability, 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 research and development expenditures.

“Gov. Phil Murphy’s focus on connecting innovative companies with access to much-need capital long predates COVID-19 and has become more important than ever in recent months as they face financial hurdles imposed by the pandemic,” said NJEDA Chief Executive Officer Tim Sullivan.

Sullivan noted that entrepreneurs routinely find tremendous value in the NOL Program as a way to sell their losses without having to forgo equity in their businesses.

Additional NOL Program benefits include:

• Emerging companies can use the funding they receive as working capital, and the businesses to which they sell are able to lower their tax burden;
• The average historical award is over $1 million;
• Nearly 90 percent of applicants successfully receive funding.

To participate in this year’s NOL Program, companies must apply online by Sept. 30, 2020. New Jersey state taxes must be filed in order to participate in the program. The deadline for the annual program is traditionally June 30, however Governor Murphy extended it via Executive Order 159 earlier this summer due to the COVID-19 pandemic. The NJEDA works collaboratively with the New Jersey Department of Treasury’s Division of Taxation to administer the program.

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