The New Jersey Economic Development Authority (EDA) has begun accepting applications online for this year’s New Jersey Technology Business Tax Certificate Transfer (NOL) Program.
In essence, the NOL Program lets biotech and other tech companies with protected intellectual property sell their New Jersey tax losses and/or R&D tax credits to raise cash to finance their growth and operations.
Emerging technology and biotechnology companies interested in applying should visit http://www.njeda.com/nol. Companies must apply online by June 30, 2017.
Our advice: Don’t wait until the last minute to look into the program. There are criteria you must meet and paperwork you must file. You also have to get your tax returns done and find a buyer for your credits. The EDA will help out there.
While the program helps pharmaceutical and life-sciences startups that may spend years in research and development before they commercialize, it also works well for companies like the Kearny startup FUSAR, which has been pouring money and effort for years into the R&D of its hardware- and software-connected mobility products for action sports.
Said Ryan Shearman, founder and CEO of FUSAR, “We spoke to a number of consultants who walk people through the paperwork on these kinds of credits, and one thing we kept on hearing was how much money is on the table for these kinds of deals.
“We have spent about $2 million in R&D over the last three years, and last year recouped $100,000 through the NOL program. This year I expect it to be $100,000 again. For a company that is still in its infancy, that’s a huge amount of capital.”
Last year the timing was great, Shearman told us. “We received our funds in November, just as we were gearing up to produce goods for the holiday season. We were able to leverage the program with a high degree of success last year, and we are looking forward to doing so again this year.”
Shearman said that his CFO, Clayton Patton, dealt with all the required paperwork, and after having done it once, he won’t find it so daunting this year. “Last year, it was a bit mysterious. We had to figure it out on our own. But this year, we have a buyer lined up and ready. It is the same buyer we used last year, and they said that as long as we have everything lined up and authorized they’ll move quickly.
“One of the most important things for me in my role as a CEO of an early-stage company is filtering out noise. One of the things I thought when I first heard about the program was, ‘no, it’s too daunting; it will take too much of my time; it’s not worth it.’ Clayton, our CFO, gave it a second look and told me we should reconsider.
“Had he not done that, we might not have gone through with applying to the program and wouldn’t have received the funds. My advice to other companies is: Don’t be afraid of the process. It’s really not that bad. The state has made it so that, as long as you are a company that qualifies, the hoops are manageable. It’s worthwhile for that kind of equity-free capital. You can’t beat it!”
Holmdel-based Avlino Inc., which offers solutions and services in analytics to help organizations use data more effectively, participated in the NOL Program for the first time in 2016.
“The NOL Program created an opportunity for Avlino to sell back its net operating losses and R&D tax credits to profitable companies,” said President and CEO Ramana Jampala, “Under this program, Avlino was able to reinvest those dollars back into product development and to augment our New Jersey-based team.”