How companies can apply to sell net operating losses and unused R&D tax credits for cash

Here’s how you can turn a business loss into a win.

This week, the New Jersey Economic Development Authority began taking applications for its 2023 Technology Business Tax Certificate Transfer Program, commonly known as the Net Operating Loss program.

The 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 & development tax credits to unrelated profitable corporations for cash.

The NOL Program is accepting applications through June 30. (Apply here.)

Participants can use the capital raised through the NOL program to help cover allowable costs incurred in connection with operating their businesses, such as salaries, R&D and other working capital expenditures.

The program’s annual cap is now $75 million. A lifetime cap for an individual applicant is $20 million.

“It’s fitting that the application for this year’s NOL program opened during Small Business Week, as the program routinely helps companies keep their lights on, their employees paid and propels their research & development forward,” EDA CEO Tim Sullivan said. “Enhancements made to the program by the EDA help ensure emerging companies have access to the capital they need to succeed, which is a key component of fulfilling Gov. (Phil) Murphy’s vision to establish New Jersey as a leader in innovation.”

Since the program’s inception in the late 1990s, more than $1.17 billion in funding has been distributed to over 570 technology and life sciences companies. The average award for companies approved to sell their net operating losses through the program in 2022 was over $3.1 million.

In an effort to create the most diverse and inclusive innovation ecosystem in the nation, $15 million of the $75 million program allocation will be reserved for the surrender of transferable tax benefits exclusively by eligible companies operating within the boundaries of the state’s three Innovation Zones of Newark, Camden and the Greater New Brunswick area, companies located in Opportunity Zones and/or women- or minority-owned businesses certified by the state of New Jersey.