TRENTON, N.J. — Gov. Mikie Sherrill signed legislation Friday expanding state assistance for small businesses seeking to transition to employee ownership models.
The legislation, S4218/A5016, authorizes the New Jersey Economic Development Authority to establish an Employee Ownership Transition Program offering financial assistance, consulting services and other resources to businesses considering employee ownership.
“Helping businesses stay rooted in New Jersey is vital to protecting thousands of jobs and millions of dollars in investment,” said Governor Sherrill. “Investment in proven business succession strategies like employee ownership will protect jobs and maintain the vibrancy of our communities, and with the NJEDA’s Employee Ownership Transition Program, small business owners across the state will have the resources needed to responsibly plan for the future.”
The program will provide financial assistance to help cover the cost of employee ownership feasibility studies and offer consulting services to businesses that choose to transition to an employee ownership model.
The law also establishes an Employee Ownership Revolving Loan Fund to provide financing for employee ownership conversions. The Sherrill administration said it will be the first such fund in the nation to directly finance the formation of employee-owned businesses.
The NJEDA will also provide information and resources about employee ownership, conduct outreach in partnership with educational institutions and offer early-stage technical assistance to businesses considering employee ownership as part of their growth or succession plans.
New Jersey has nearly 90 employee stock ownership plans, or ESOPs, with nearly $65 billion in plan assets covering more than 423,000 current employees and retirees, according to the governor’s office. The average stock account for eligible current employees is nearly $190,000.
“As more small business owners consider retirement and the future of their company, Governor Sherrill is helping expand state resources in an effort to foster sustainable business transition plans, strengthen communities, and protect jobs,” said NJEDA Chief Executive Officer Evan Weiss. “Through the Employee Ownership Transition Program, the NJEDA will make it easier to establish employee ownership models, creating life-changing economic opportunities for workers and their families.”
The measure expands the NJEDA’s existing Employee Stock Ownership Plan Assistance Program.
“New Jersey is facing a generational transition in business ownership, so we need new policies that will keep successful companies throughout the state operating and growing in the years to come,” said Senator Andrew Zwicker. “Employee ownership is a proven model that helps workers build wealth, strengthen their businesses, and preserve well-paying jobs in their communities. This legislation will allow the EDA to help businesses make the transition to employee ownership possible.”
The legislation was sponsored by Sens. Andrew Zwicker and Shirley K. Turner and Assembly members Lisa Swain, Roy Freiman and Al Barlas.
“With the passage and signing of S4218/A5016, the New Jerseyans who help build our local businesses can now fully share in their success,” said Assemblywoman Lisa Swain. “By supporting and expanding employee stock ownership programs, we’re giving hardworking constituents a real shot at building generational wealth while handing small business owners a strategy to keep their doors open for the long term. When workers own a piece of the company they dedicate their careers to, everyone wins: our talent stays put, our neighborhoods thrive, and our local economy gets stronger.”
