Governor McGreevey Announces Record Number of Approvals to Enable High-Tech Businesses to Raise $40 Million in Cash Through EDA Tax Loss Credit Transfer Programs.
TRENTON, N.J.--(BUSINESS WIRE)--Sept. 18, 2002
Governor James E. McGreevey announced today that a record 165 applications have been approved this year under New Jersey's Technology Business Tax Certificate Transfer Program that enables certain high-technology companies to raise cash to finance their growth and operations by selling tax losses or research and development tax credits to other businesses.
The program makes $40 million available each year to assist high-tech businesses.
Governor McGreevey made the announcement following approval of the applications by the New Jersey Economic Development Authority (EDA) which administers the program in conjunction with the New Jersey Division of Taxation and the New Jersey Commission on Science and Technology.
"This year's total represents a 29 percent increase in programmatic activity," said Governor McGreevey, who sponsored the legislation that established the program in 1997 while serving as a State Senator. "The program and its success demonstrate New Jersey's innovative approach to supporting the growth of high-technology companies in our State."
Now in its fourth year, the Technology Business Tax Certificate Transfer Program has proven increasingly popular and successful. The number of approvals under the program increased from 118 companies in 2001 to 165 approved applications this year, including 95 applications from returning companies and 70 new applications.
"This program serves as a model to other states on how to creatively support high-tech companies that require financial assistance to grow their business," said EDA Executive Director Caren S. Franzini. "Over the past four years, the program has become an effective and useful tool in helping to bring technology products to market, finance business operations and attract new capital."
To be eligible for the program, a company must be a new or expanding technology or biotechnology business that has a maximum of 225 employees and bases at least 75 percent of its workforce in New Jersey. The program enables such companies to sell unused Net Operating Loss (NOL) carryforwards and unused research and development tax credits to other New Jersey corporations for at least 75 percent of their value.
In turn, companies selling NOLs or research and development tax credits are able to use the money they receive to finance business expenses including the purchase of equipment, facility expansions or to pay salaries.
Companies can apply more than once for assistance through the program subject to a total lifetime cap of $10 million. Companies purchasing NOLs or tax credits must do a major portion of their business in New Jersey.
Applications are reviewed by the Division of Taxation to establish the value of the tax loss or tax credit benefit. The Commission on Science and Technology reviews the applications for technology qualifications. The NJEDA makes the final determination on eligibility.
When an application is approved, a certificate is issued that identifies the value of the tax benefit being exchanged and transfers it from the selling to the buying company.
Awards are made annually. The deadline for applications is the end of June and approvals are announced in the fall.
The NJEDA was established in 1974 to encourage business expansion and create jobs in New Jersey. It has arranged for nearly $15.3 billion in financing assistance since its inception. For more information about the Technology Business Tax Certificate Transfer Program and other ways the NJEDA supports the growth of high technology businesses in New Jersey, contact the Authority's Division of Commercial Lending at (609) 292-0187. The application for the tax certificate program can be accessed at the NJEDA website at www.njeda.com. A listing of the companies approved in 2002 is available by calling (609) 341-2065.
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|Date:||Sep 18, 2002|
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