New Jersey Direct Financial Incentives
New Jersey's economic development, finance and tax organizations provide a range of incentive programs to initiate new business and commercial investment.
Q1 2014
Created by Governor Christie and led by Lt. Governor Guadagno, the Partnership for Action is a four-pronged public-private approach for all economic development activity in New Jersey and the starting point for all initiatives, policies and efforts to grow New Jersey’s economy and create quality, sustainable jobs in our communities. The four elements of the Partnership include Choose New Jersey, an independently funded and operated 501(c)(3) nonprofit corporation created to encourage and nurture economic growth throughout New Jersey; the Business Action Center, which reports directly to the Lt. Governor and provides the business community with a single point of contact, applying a proactive, customer-service approach to businesses’ interactions with State government; the New Jersey Economic Development Authority (EDA), serving as the state’s financing arm; and the office of the Secretary of Higher Education.
Signed into law in Sept. 2013, the New Jersey Economic Opportunity Act of 2013 merges the State’s economic development incentive programs with the goal of enhancing business attraction, retention and job creation efforts and strengthening New Jersey’s competitive edge in the global economy. The Grow New Jersey Assistance Program (Grow NJ) is now the main job creation incentive program and the Economic Redevelopment and Growth Program (ERG) is the State’s key developer incentive program.
Base tax credits under the new Grow NJ program range from $500 to $5,000 per job, per year with bonus credits ranging from $250 to $3,000 per job, per year. The geographic boundaries have been extended, and capital investment and employment eligibility requirements have been reduced.
Through the new ERG, incentive grants are increased, with bonuses of 10-percent available to incentivize targeted development goals. ERG also has expanded geographic boundaries.
EDA is no longer accepting applications for assistance under the Business Employment Incentive Program (BEIP), Business Retention and Relocation Assistance Grant Program (BRRAG), and Urban Transit Hub Tax Credit Program (UTHTC).
More information on the Economic Opportunity Act can be found via www.njeda.com. EDA expects to formally launch the new programs in November 2013.
The Stronger NJ Neighborhood and Community Revitalization (NCR) Program is a $75 million program will offer financial assistance to support 1) development and public improvement projects; 2) main street revitalization; and, 3) Community Development Financial Institutions providing loans to small businesses.
Sales and Use Tax Exemption Program (STX) offers companies a sales tax exemption certificate which applies only to property purchased for installation at the approved project site. This certificate allows the business to purchase machinery, equipment, furniture, fixtures, and building materials for the project without the imposition of the state’s 7 percent sales tax. Eligible companies must have 1,000 or more employees in New Jersey and relocate 500 or more to a new business location. Life sciences or manufacturing companies may be eligible if they relocate 250 or more employees to a new facility. Companies must maintain the retained full-time jobs in New Jersey for five years.
Angel Investor Tax Credit Program was signed by the Governor on Jan. 31, 2013, launched by the EDA on July 1, 2013 and provides tax credits for up to 10 percent of a qualified investment in an emerging technology business with a physical presence in New Jersey and that conducts research, manufacturing, or technology commercialization in the state. EDA approved the first investment on 8/13/2013.
Bond Financing:
A creditworthy manufacturing company, a 501(c)(3) not-for-profit organization or an exempt facility in New Jersey can apply for long-term financing under the Bond Financing Program. $500,000 to $10 million in tax-exempt bonds for for-profit companies, with both a fixed or variable interest rate, and terms up to 20 years for real estate and 10 years for equipment. Or, $500,000 with no dollar limit in tax-exempt bonds for qualified not-for-profit organizations.
Tax-exempt bonds for eligible for-profit companies can be used to finance capital improvements and expansions, including real estate acquisitions, new equipment, machinery, building construction, and renovations. Tax-exempt bonds for not-for-profit organizations seeking capital to expand community services can be used to finance land and building acquisitions, new construction and renovations, equipment purchases, debt refinancing and working capital. Government tax-exempt bonds can be used for projects that are owned and operated for the benefit of local, county and state government bodies.
Small Business Fund:
An expedited approval process provides financial assistance to qualified businesses through direct loans or guarantees, with the choice of a variable or fixed interest rate. A small, minority-owned or women-owned business in NJ in operation for at least one full year or not-for-profit corporation in operation for at least three full years may qualify for up to $300,000 for credit scores greater than or equal to 700; up to $125,000 for credit scores greater than or equal to 650; and up to $300,000 for Not-for-Profits with 1.1X historical debt service coverage. It may be used for fixed assets and working capital.
New Jersey Business Growth Fund:
A joint program of the EDA and PNC Bank. Small or mid-sized companies that are creating or retaining jobs in NJ can apply for financing of up to a $3 million bank loan with a 25 percent or 50 percent EDA guarantee. The maximum EDA guarantee is $1.5 million. It can be used for the funding of real estate or equipment. Companies must commit to create one full-time job in NJ for every $50,000 of guarantee provided by the EDA with the exception of manufacturers, which must commit to maintain one existing full-time job in New Jersey per $50,000.
Edison Innovation Clean Energy Manufacturing Fund (CEMF):
Provides support for manufacturers that need to identify a manufacturing site, perform site improvements, construct a facility and/or purchase equipment. Organizations awarded a grant under CEMF are automatically certified as a NJ manufacturer through New Jersey’s Renewable Energy Manufacturing Incentive (REMI) program. REMI provides rebates to New Jersey residents, businesses, local governments and not-for-profit organizations that purchase and install solar panels, inverters and racking systems manufactured in NJ.
A qualified manufacturer of Class I renewable energy or energy efficiency systems, products or technologies may be eligible for up to $3.3 million in grants and loans for project assessment and design, and project construction and operation associated with a new manufacturing line or the material expansion of an existing line of a New Jersey manufacturing facility. New Edison Innovation Fund Programs: the Christie Administration announced three new programs in August 2011 to support emerging companies that have attracted capital through angel and venture capital investors - the Edison Innovation Angel Growth Fund; Edison Innovation VC Growth Fund; and, Edison Innovation Growth Stars Fund; all are structured as subordinated convertible debt and benefit technology and life sciences companies by providing growth capital to directly fund uses such as hiring key staff, product marketing and sales. In Feb. 2013, Phone.com, a tenant at NJIT’s Enterprise Development Center, closed on a $600,000 loan through the Edison Innovation VC Growth Fund. The Newark-based business is a next-generation, cloud-based phone company focused on the needs of small business and entrepreneurs. Phone.com, which expects to add 18 new employees to its staff of six, was recently recognized by INC500 as one of the fastest growing telecom companies in the United States.
Main Street Business Assistance Program:
Provides financial support to commercial banks in New Jersey to provide financial assistance to small and mid-sized businesses and not-for-profit organizations with projects in NJ. It can provide direct loans, bank term loan participations and/or guarantees and line of credit guarantees for small or mid-sized business or not-for-profit organizations in operation in NJ for at least two years. Can be used for fixed assets, refinancing of debt or working capital.
Edison Innovation Growth Fund
New Jersey revenue generating technology companies may be eligible for growth capital under a matching program. These funds are currently fully invested, but please check back in the near future for the redeployment of available funds.
Edison Innovation Zones
Throughout the state, New Jersey has established three Innovation Zones that encompass state universities, research institutions and related businesses. These "technology neighborhoods" are designed to spur collaborative efforts and encourage the rapid transfer of discoveries from the laboratory to the marketplace. Resident businesses may be eligible for special benefits and financing incentives. Innovation Zones are located in Newark, Camden and the Greater New Brunswick area.
Energy Efficiency and Conservation Block Grants (EECBG)
The Energy Efficiency and Conservation Block Grant (EECBG) Rebate Program provides supplemental funding up to $20,000 for eligible New Jersey local government entities to lower the cost of installing energy conservation measures. Funding for the EECBG Rebate Program is provided through the American Recovery and Reinvestment Act (ARRA).
Energy Sales Tax Exemption for Certain Counties
Manufacturing businesses in Salem County may be eligible for energy sales tax exemption for the retail sale, transmission or distribution of electricity and natural gas.
Federal Historically Underutilized Business Zone (HUBZone) Empowerment Contracting Program
The HUBZone Empowerment Contracting Program provides federal contracting preferences to businesses that obtain HUBZone certification in part by employing staff who live in a HUBZone. The company must also maintain a "principal office" in one of these specially designated areas. New Jersey's HUBZones are located in over 60 cities and towns throughout 20 counties.
Foreign Trade Zones
Foreign Trade Zones allow companies to bring foreign goods or raw materials for manufacturing and/or assembling into the United States without formal customs entry or payment of customs duties and government excise taxes until products leave the zone. If the final product is exported from the United States, no U.S. customs duty or excise tax is levied. If the final product is entered into the commerce of the United States, fees are only due at the time of transfer on the product or its parts, whichever is lower. New Jersey has five foreign trade zones strategically located throughout the state: Morris County, Port Newark/Port Elizabeth Marine Terminal, South Jersey Port in Camden, Mercer County Airport and Lakewood Development Corporation.
Fund for Community Economic Development
The Fund for Community Economic Development provides loans and loan guarantees to support community and economic development initiatives in New Jersey's urban centers. This program offers three forms of assistance: up to a $750,000 loan for lenders to support community-based organizations and projects; up to $50,000 for feasibility studies and other pre-development costs; and up to $1.25 million for real estate projects to fill financing gaps.
Hazardous Discharge Site Remediation Fund (HDSRF)
Loans, grants and matching grants are available to public, private and not-for-profit entities for the investigation and/or remediation of known or suspected contaminated sites.
International Trade Assistance
Whether you're a New Jersey company looking to do business globally or an international company interested in establishing a business in the state, there are a number of resources that are available to assist you. New Jersey can help your company access export and import consulting, identify buyers and new international markets for your products or services, find partners for joint ventures and strategic alliances and take advantage of financing opportunities and site selection services for companies seeking a presence in the state.
Literacy Skills Grants
The New Jersey Department of Labor & Workforce Development offers competitively awarded training funds to help businesses improve the basic skills of incumbent workers.
Local Government Energy Audit
Under this New Jersey Board of Public Utilities (BPU) program, participants select from a list of pre-qualified auditing firms who will follow the strict parameters of New Jersey's Clean Energy Program™ and deliver an investment-grade audit to identify cost-effective measures for saving energy. The program will subsidize 100 percent of the cost of the audit as long as recommended measures totaling at least 25 percent of the audit's costs are implemented. Eligible facilities include, but are not limited to, offices, courtrooms, town halls, police and fire stations, sanitation buildings, transportation structures, schools and community centers. All local governments, New Jersey state colleges or universities, and 501(c)(3) not-for-profit agencies located within the service territory of at least one of New Jersey's public utilities are eligible.
Manufacturing Equipment and Employment Investment Tax Credit Program
Investments in qualified manufacturing equipment may be eligible for the Manufacturing Equipment and Employment Investment Tax Credit. The program offers a tax credit for the tax year in which the investment was made based on the cost of the equipment, as well as each of the following two tax years based on the average increase in New Jersey employees.
Municipal Landfill Closure and Remediation Reimbursement Program
An eligible developer seeking financial assistance in the closure, remediation and redevelopment of municipal landfill sites in New Jersey may be eligible for reimbursement of 75 percent of the closure or cleanup costs.
New Jersey Manufacturing Extension Program (NJMEP)
NJMEP assists manufacturing companies to become more productive, profitable and globally competitive. The program offers technical and management solutions to competitive problems and represents a valuable resource for manufacturing businesses.
New Jersey SmartStart Buildings® Program
The New Jersey SmartStart Buildings Program provides design support for large development projects (buildings over 50,000 square feet); technical assistance for smaller projects (buildings under 50,000 square feet); and financial incentives for the purchase and installation of energy efficiency measures. Eligible equipment includes heating and cooling systems such as electric chillers, gas cooling, electric unitary HVAC, ground source heat pumps and gas heating and water heating; lighting and lighting controls; motors and variable frequency drives; and a custom measures track that provides incentives for innovative measures that are proven to be cost-effective.
New Jobs Investment Tax Credit
The New Jobs Investment Tax Credit is available for taxpayers who invest in new or expanded business facilities that create new jobs in New Jersey. The investment must create at least five new jobs for small or mid-size businesses or 50 new jobs for larger business taxpayers, and must meet the median annual compensation requirement for the current tax year.
Pay for Performance
Pay for Performance is a New Jersey Board of Public Utilities (BPU) program directed at large facilities in a manner that directly links incentives to energy savings in a whole-building approach. The existing buildings component of the program is designed for commercial, industrial, and multifamily buildings with an annual peak demand in excess of 200 kW. The new construction component targets buildings with 50,000 square feet or more of planned space, as well as buildings undergoing substantial renovation. Pay for Performance relies on a network of Program Partners that provides technical services under direct contract to building owners. These Partners develop an Energy Reduction Plan for each project that includes technical components typically found in a traditional energy audit, a financial plan for funding the energy efficient measures and a construction schedule for installation. Three incentives are awarded as program milestones are completed with the first incentive paid at the completion of the Energy Reduction Plan, the second paid once all measures are installed, and the final incentive paid following a comprehensive verification report that proves the savings targets have been met or exceeded.
In addition, Pay for Performance projects that incorporate Combined Heat & Power (CHP) will be eligible for additional incentives up to $1 million. The annual CHP solicitation has been eliminated and customers are now able to apply for CHP incentives on a year-round basis (funding permitted). To qualify, the facility must be located in New Jersey, and the customer must purchase electricity from the utility grid. A minimum overall annual system efficiency rating of 60 percent, based on total energy input and total utilized energy output, must be met. Additional requirements are specified as part of the CHP Application Package within the Pay for Performance Program description.
Permitting Assistance
New Jersey's Business Action Center can work as an extension of your team to help navigate the regulatory, permitting and compliance process inherent in relocation and expansion projects.
Petroleum Underground Storage Tank Program - Leaking Tanks Commercial & Residential
Grant and loan funding is available to business owners and residential property owners that must upgrade, close and remediate discharge from petroleum underground storage tanks. Applicants must have less than 10 tanks on site and net worth must not exceed $2 million.
Petroleum Underground Storage Tank Program - Non-Leaking Tanks Commercial, Residential & Not-for-Profit The Petroleum Underground Storage Tank Program provides grants to business owners and residential property owners who have less than 10 tanks on site and are required by law to upgrade, close and remediate discharge from those tanks.
Positive Recruitment
The New Jersey Department of Labor and Workforce Development offers assistance recruiting qualified workers.
Registered Apprenticeship Incentive Program
Employers with up to 450 employees may be eligible for financial resources to upgrade the skills of employees working in the direct production of goods. One-time grants of up to $5,000 are available for each employee who completes 52 weeks of employment as an apprentice under the Registered Apprenticeship Incentive Program.
Renewable Energy Incentive Program (REIP)
Residents, local government officials, facility managers or developers building onsite renewable energy projects using solar, wind and bio-power technologies may be eligible for financial incentives and support services under the Renewable Energy Incentive Program. Incentives vary according to the type of project, type of building, type of equipment and other factors. Generally, residential, government and municipal solar photovoltaic projects up to 50 kW may be eligible for rebates up to $0.75/watt of capacity, up to 30 kW. Wind systems may be eligible for up to $3.20/kWh of capacity, and sustainable biomass systems may be eligible for up to $5/watt of capacity. REIP is part of New Jersey's Clean Energy Program™ administered by the New Jersey Board of Public Utilities (BPU).
Research and Development Tax Credit
Businesses claiming the federal research and development tax credit for a new or improved product, process or software program qualify for the state's Research and Development Tax Credit. The program provides a credit of 10 percent of the excess research expenses over a base year amount plus 10 percent of basic research payments, as taken under the federal tax credit. Unused credits may be sold under the Technology Business Tax Certificate Transfer Program.
Site Selection Services
New Jersey offers a full range of site selection tools including development services, land assemblage, structuring financing and facilitating the permitting process. This full-service approach provides considerable financing advantages for companies considering moving to or expanding in New Jersey.
Small Business Services:
Entrepreneurial Training Initiative
To help New Jersey's entrepreneurs and small businesses start, run and grow, the New Jersey Economic Development Authority (EDA) has formed a strategic partnership with UCEDC, a statewide, not-for-profit economic development corporation dedicated to assisting and financing small businesses, minority- and women-owned enterprises. Whether you are an entrepreneur looking for assistance to create a business plan and get your idea up and running, or you are an existing small business looking to grow, UCEDC offers programs to help. Business basics workshops, entrepreneurial training, business mentoring, International Organization for Standardization (ISO) Training 9001 and more are available.
New Jersey Small Business Development Centers (NJSBDC)
The NJSBDC network consists of eleven full-service Regional Centers and additional offices in every county of New Jersey providing management consulting services and training to small business owners and entrepreneurs. The network helps small businesses expand operations, manage growth and launch new ventures.
Latin American Economic Development Association (LAEDA)
The Latin American Economic Development Association, Inc. (LAEDA) was incorporated in New Jersey in 1987 as a nonprofit, 501 (c) (3) tax-exempt corporation. The organization was established through the efforts of the National Puerto Rican Coalition along with local community and business leaders to create economic opportunities for minorities while facilitating the redevelopment of Camden City. LAEDA is a successfully governed and managed minority enterprise.
Rising Tide Capital, Inc.
Rising Tide Capital is a 501-c-3 non-profit organization based in Jersey City, NJ, transforming lives and communities through entrepreneurship. Rising Tide Capital's programs support women, minorities, immigrants and other traditionally marginalized populations to start and grow successful businesses.
Solar Renewable Energy Certificate (SREC) Registration Program (SRP)
The SRP is used to register the intent to install non-rebated solar projects in New Jersey. Owners of non-rebated solar projects must register their projects in the SRP prior to the start of construction in order to establish the project's eligibility to earn SRECs. Registration of the intent to participate in New Jersey's solar marketplace provides market participants with information about the pipeline of anticipated new solar capacity and insight into future SREC pricing. Each time a system generates 1,000 kWh of electricity, an SREC is earned and placed in the customer's electronic account. SRECs can then be sold on the SREC tracking system, providing revenue for the first 15 years of the system's life. Electricity suppliers, the primary purchasers of SRECs, are required to pay a Solar Alternative Compliance Payment (SACP) if they do not meet the requirements of New Jersey's solar renewable portfolio standard (RPS). One way they can meet their RPS requirement is by purchasing SRECs. As SRECs are traded in a competitive market, the price may vary significantly. The actual price of an SREC during a trading period can and will fluctuate depending on supply and demand.
Statewide Loan Pool
Under the Statewide Loan Pool program, the New Jersey Economic Development Authority (EDA) participates in loans from EDA participating banks. The EDA may also guarantee a portion of the remaining lender's exposure when a bank requires additional comfort on a particular project. Up to $1.25 million is available for fixed asset financing, and up to $750,000 is available for working capital. Additionally, $1.5 million is available under either program for loan guarantees. To qualify, eligible businesses or not-for-profits must create one new full-time job for every $50,000 of EDA assistance. In addition, preference is given to businesses that are job intensive, will create or maintain tax ratables, are located in an economically distressed area, represent an important economic sector of the state and/or will contribute to its growth and diversity.
Technology Business Tax Certificate Transfer Program
Qualified biotechnology and technology companies may be eligible to sell unused net operating losses and R&D tax credits to unrelated profitable corporations for at least 80 percent of their value, up to a maximum lifetime benefit of $15 million. To qualify, the applicant must have at least one full-time employee working in New Jersey if incorporated less than three years, five full-time employees in New Jersey if incorporated more than three years but less than five years, and 10 full-time employees in New Jersey if incorporated more than five years.
Urban Enterprise Zones (UEZ)
New Jersey's UEZ Program was created to foster an economic climate that revitalizes designated urban communities and stimulates their growth by encouraging businesses to develop and create private sector jobs through public and private investment. Participating businesses may be eligible for a variety of incentives. The program currently has over 30 zones located in over 35 municipalities throughout the state.
Urban Enterprise Zones (UEZ) Manufacturers Energy Sales Tax Exemption
Certified UEZ manufacturers with at least 250 full-time employees, 50 percent of whom are involved in the manufacturing process, may be eligible for an exemption from the sales and use tax on energy and utility services.
Urban Enterprise Zones (UEZ) Sales Tax Exemption on Purchases
Businesses located in a designated UEZ may be eligible for an exemption from sales tax on most purchases, with certain exceptions. The exemption applies to the full sales tax otherwise due on purchases of tangible personal property (except motor vehicles, parts or supplies), and most services (except telecommunications services). Businesses with total gross receipts of less than $10 million (for all locations, in and out of the zones) may be eligible for the exemption at time of purchase, while businesses with total gross receipts over $10 million (for all locations, in and out of the zones) will pay the prevailing sales tax at time of purchase and apply quarterly for a refund of sales taxes paid. A separate exemption, not guided by total gross receipts, applies to materials, supplies and services for the exclusive use in erecting structures or building on, or improving, altering or repairing, the real property of a qualified business located in the zone that are purchased for the benefit of the business property located in the zone, whether purchased by the qualified business or a contractor.
Urban Enterprise Zones (UEZ) Employment Tax Credit
UEZ-based businesses receive employment tax credits for hiring new, additional full-time employees. A credit of $1,500 is allowed for each new, additional full-time employee living in a UEZ municipality who immediately prior to employment by the taxpayer was unemployed for at least 90 days, or was dependent upon public assistance as the primary source of income. For new, additional full-time employees not qualifying for the $1,500 credit, a credit of $500 is allowed if the employee lives in a UEZ municipality and was not employed in the UEZ municipality immediately prior to being hired. Employees must be employed for at least six continuous months to earn the credit.
Urban Enterprise Zones (UEZ) Investment Tax Credit
Certified UEZ businesses that are not entitled to a UEZ Employee Tax Credit may be entitled to the UEZ Investment Tax Credit. This credit is available to non-retail and non-warehouse corporations with fewer than 50 employees. For employers with fewer than 10 employees, qualified investments must be at least $5,000. For employers with more than 10 employees, the minimum investment requirement of $5,000 increases by $500 per each additional employee beyond 10. The tax credit may be equal to up to 8 percent of the qualified investment.
Urban Plus
Medium-sized projects in any one of nine endorsed urban municipalities (Camden, Trenton, Newark, Jersey City, Paterson, Elizabeth, East Orange, New Brunswick, or Atlantic City) may be eligible for loans up to $3 million for fixed asset financing.
New Jersey State Contact:
New Jersey Business Action Center
Trenton, NJ 08625-0820
866-534-7789
www.newjerseybusiness.gov
Incentive and tax information is provided to Area Development by each state's economic development or commerce agency for information purposes only and is subject to revision at any time by the state government. Please contact the state agency directly for full requirements and offerings.