Are New Jersey’s Business Loan, Incentive, and Grant Programs Right for You?
Ronald Reagan famously said that the nine most terrifying words in the English language are, “I’m from the government and I’m here to help.” But for businesses starting up, expanding, or relocating into New Jersey, state government can be helpful, if you know where to start. We regularly counsel clients on government incentives, loans, and business assistance offered through the nationally-recognized New Jersey Economic Development Authority (NJEDA) and other State agencies.
The NJEDA’s programs assist businesses of all sizes access loans/loan guarantees, as well as business and tax incentives. A few of the many programs offered are listed below.
The NJEDA offers several loan programs that support small and mid-sized companies acquiring fixed assets, obtaining working capital, and refinancing debt:
- The Premier Lender Program provides loan and line of credit participations/guarantees in varying amounts. The NJEDA has a group of preferred lenders, and rates are generally at or below traditional loans. In return for the NJEDA’s assistance, the business has to agree to add one new full-time employee for every $65,000 of NJEDA exposure.
- The Small Business Fund provides up to $500,000 for small businesses, minority or woman owned businesses, and nonprofits that have been in business for at least one to three years.
- The Direct Loan Program provides up to $2 million in loans for fixed assets and $750,000 for working capital when traditional financing is not available. Like the Premier Lender Program, the business has to agree to add one new full-time employee for every $65,000 of NJEDA exposure.
Businesses of all sizes look for incentives when considering an expansion or relocation. New Jersey’s robust incentive programs are designed to foster job growth and investment in commercial, industrial, residential, and high-tech industries:
- The Grow New Jersey Assistance Program is the State’s premier job creation and retention program. Companies must create or retain a certain number of jobs based upon their industry and location, and make a capital investment at their qualified business facility. Annual tax incentives can range from $250 to $15,000 per employee for qualifying businesses.
- The Economic Redevelopment and Growth Program is an incentive program for commercial and residential developers who have gaps in their existing financing (such as insufficient revenues to support the project or projects with a below market development margin or rate of return). The NJEDA cautions that the Program is not a substitute for conventional financing, and there is a rigorous financial analysis needed. However, qualifying projects can receive incentive grant reimbursement of up to 20 percent of total project cost, or in certain cases 30 or 40 percent if additional criteria are met.
- The Angel Investor Tax Credit Program allows a person or entity who makes a qualified investment (a non‐refundable transfer of cash) in a New Jersey Emerging Technology Business to claim a tax credit against their corporate business tax or gross income tax. The tax credit is equal to 10 percent of the qualified investment (up to $500,000 per qualified investment) and the NJEDA can approve up to $25 million of Angel Investor Tax Credit per calendar year.
- The Urban Enterprise Zone Manufacturers Energy Sales Tax Exemption allows large manufacturers (at least 250 full-time workers, at least 50% of whom are involved in the manufacturing process) that locate in an Urban Enterprise Zone, to be eligible for an exemption from the sales and use tax for electricity and natural gas utilities. There are currently 31 Urban Enterprise Zones throughout the State, which is subject to change due to the planned expiration of several zones scheduled for January 1, 2017.
Other Types of Business Assistance
Besides loans and tax credits issued through the NJEDA, there are also programs through other state agencies that may be of interest to businesses. For example:
- The New Jersey Department of Labor and Workforce Development offers training grants, including the Skills Partnership Training Fund, which reimburses New Jersey employers up to 50 percent of the cost of training new or existing employees to meet the skill requirements for available high-skill, high-wage jobs in New Jersey, up to a maximum of $50,000 per company or $250,000 per industry-specific consortium.
- The Department of State’s New Jersey Business Action Center provides planning and regulatory support to companies looking to locate or expand in New Jersey.
- The New Jersey Housing and Mortgage Finance Authority has a suite of programs to assist developers building and maintaining low- and moderate-income housing, multi-family housing, and housing for residents with special needs.
While not every business will find a program to fit its needs, companies interested in starting up, expanding, or relocating should explore the number of options available. Members of the Gibbons Government & Regulatory Affairs Department can help you review the opportunities and guide you through the process of seeking and obtaining economic development assistance from the State.