Starting today, New Jersey business owners can apply to see if they qualify for up to $35,000 in financial assistance to start an employee stock ownership plan. This program was created by the New Jersey Economic Development Authority and is supported by the Rutgers Institute for the Study of Employee Ownership and Profit Sharing.
The NJEDA board recently approved the creation of the Employee Stock Ownership Plan (ESOP) Assistance Program, which will connect applicants with an approved contractor to perform feasibility studies and provide technical assistance.
The $2.7 million ESOP Assistance Program aims to increase employee ownership models, which can provide employees with opportunities to have a greater stake in a business, generate sustainable and equitable wealth, and ensure greater financial security.
“By expanding ESOPs, the NJEDA aims to create life-changing economic opportunities for workers and their families while supporting sustainable business transition plans, strengthening communities and businesses across the state.” said NJEDA Chief Executive Officer Tim Sullivan.
An ESOP plan is an employee benefit plan that gives workers ownership interest in the company in the form of shares of stock. ESOPs give the sponsoring company and participants certain tax benefits.
New Jersey has about 90 ESOPs, which have nearly $65 billion in plan assets covering more than 423,000 employees and retirees, with an average stock account for eligible employees of close to $190,000. The ESOP Assistance Program also will alleviate risks for the business owner as they explore an employee ownership model.
“Through the promotion of employee ownership models, the NJEDA aims to close racial wealth gaps, preserve diverse businesses, and increase household incomes for working- class families,” said NJEDA Chief Diversity and Inclusion Officer Michelle Bodden.
African American Chamber of Commerce of New Jersey Founder, President, & Chief Executive Officer John E. Harmon, Sr. said, “The ability to connect the hard-working citizens of NJ, to this level of professional assistance can be transformational.”
“The NJEDA’s support for companies exploring employee ownership through ESOPs is a major win for our members and their employees,” said Statewide Hispanic Chamber of Commerce President and Chief Executive Officer Carlos Medina.
In February, Onyx Partners Group and Lazear Capital Partners were approved by the NJEDA board as contractors for the ESOP Assistance Program. Both firms are experienced in ESOP transitions, including the design and development of feasibility studies and valuations. Applications for the ESOP Assistance Program are expected to open in early May.
