In December, New Jersey Economic Development Authority (NJEDA) announced that it has approved 46 technology and life sciences companies to participate in the 2019 Net Operating Loss (NOL) Program also known as the Technology Business Tax Certificate Transfer Program.

The NOL Program has long been heralded as a lifeline for companies going through unprofitable times. The program enables eligible technology and life sciences companies to sell New Jersey net operating losses and unused research and development tax credits to unrelated profitable corporations for cash. The cash can then be used for working capital or to fund research.

The NJEDA and the New Jersey Department of Treasury’s Division of Taxation administer the program. To date, more than $1 billion in funding has been approved for over 540 technology and life sciences companies since the program’s inception.

This year, 46 companies were approved to share $60 million through the NOL Program, the maximum amount of funding allocated for the program. This is the second year in a row that the program has hit its cap.

“Every day, entrepreneurs continue to realize the vast benefits that locating in the Garden State can bring, including our ideal location, talented workforce, and unique funding resources like the NOL Program,” NJEDA Chief Executive Officer Tim Sullivan said in a press release. “Governor Murphy has committed to recapturing New Jersey’s role as a leader in innovation, and that starts with connecting entrepreneurs to much-needed capital.”

Some qualifications:

Only technology and biotechnology companies whose primary business involves the provision of a scientific process, product or service are eligible

An eligible company must own, have filed for, or have a license to use protected, proprietary intellectual property (defined as a patent or a registered copyright)

An eligible company cannot have had positive net operating income on either of its last two full-year income statements according to GAAP. In addition, an eligible company cannot have a parent company with positive net operating income, or be part of a consolidated group of affiliates for federal income tax purposes with positive net operating income

An eligible company must have at least one full-time employee working in New Jersey if incorporated or formed less than three years, five full-time employees in New Jersey if incorporated or formed more than three years but less than five years, or 10 full-time employees in New Jersey if incorporated or formed more than five years

An eligible company must have financial statements for the two most recent full years of operation compiled, reviewed or audited by an independent CPA firm and prepared according to US GAAP.

This article only covers the digital and clean/sustainable/green companies that received funding through the NOL program. For a complete list of companies, including the life sciences, health and pharma companies that are using the NOL program for funds, see the table here: https://www.njeda.com/nolapprovals2019

Information about the companies came from their websites.

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