The past few years have brought novel and complex challenges to businesses across nearly every industry, and the manufacturing sector is no exception.
From financial constraints to workforce development issues and, of course, the negative impacts of the COVID-19 pandemic, the hurdles facing manufacturing businesses in New Jersey can seem insurmountable.
Yet, manufacturing is a critical tentpole of the New Jersey economy, accounting for some $54 billion of the state’s GDP (or more than 10% of all state output) and employing an average of 244,000 people.
Moreover, the sector has a rich history in the state, not to mention significant multiplier effects, supporting other industries and providing many workers a pathway to the middle class.
Long story short: Manufacturing matters in New Jersey.
That’s why the state has endeavored to ease some of the industry’s challenges, strengthen the sector, and attract new investment through the unveiling last October of the New Jersey Manufacturing Voucher Program (MVP).
What is the New Jersey Manufacturing Voucher Program? Who can benefit from the MVP? And how can manufacturing businesses apply? For answers to these questions and more, continue reading below.
A welcome development for NJ manufacturers, the New Jersey Manufacturing Voucher Program (MVP) is a program aimed at supporting the manufacturing industry in the state.
The program provides funding assistance to New Jersey manufacturers for eligible projects ranging from $5,000 to $250,000, with the goal of helping manufacturers modernize and expand their operations, increase efficiency and competitiveness, and create new jobs.
With a $20 million budget, the MVP further aims to address the challenges faced by the manufacturing sector in New Jersey. Launched and administered by the New Jersey Economic Development Authority (NJEDA), which has partnered with the New Jersey Manufacturing Extension Program (NJMEP), the MVP will provide technical assistance to participating businesses.
NJ Governor Phil Murphy said the program will “strengthen and modernize New Jersey’s manufacturing industry while creating good-paying, middle-class jobs.”
The MVP is expected to have a significant impact on the manufacturing sector in New Jersey, helping to create new jobs, retain existing jobs, stimulate economic growth in the state, and support the modernization and expansion of manufacturing businesses, ensuring New Jersey remains a leader in the advanced manufacturing landscape.
The MVP is designed to support small and medium-sized New Jersey manufacturers struggling to sustain their operations, expand their production capabilities, and create new jobs.
The program offers funding to eligible businesses to cover the costs of various activities related to business growth, such as equipment purchases and workforce or supply chain development, the implementation of new technology or employee training protocols, or even marketing.
By assisting businesses that have struggled to grow due to financial constraints, the MVP will enable New Jersey manufacturers to make the investments necessary to take their businesses to the next level, increase their competitiveness, and access new markets and customers.
It’s also worth noting that the MVP is not exclusively targeted at the manufacturing sector. According to NJEDA CEO Tim Sullivan, the program will also target the following industries:
Unfortunately, not all manufacturers are eligible for this program.
The New Jersey Economic Development Authority (NJEDA) has set specific eligibility criteria for applicants.
For example, to be eligible for the program, businesses must:
Additionally, while the grant program provides funding for equipment purchases, the equipment – both new or used – must be located and installed at a New Jersey location and used in the manufacturing process.
Furthermore, the grant amount will be up to 50% of the total project cost, with a maximum grant amount of $100,000 per project, and the aggregated project cost, including equipment and installation, must be at least $25,000.
Finally, all equipment installation contracts (including manufacturer/supplier agreements) totaling over $2,000 are subject to Prevailing Wage Act rates, which sets a wage by law for workers engaged in public works projects to protect the worker’s well-being and safeguard their employers from the adverse effects of unfair competition.
The application process for the Manufacturing Voucher Program involves a pre-qualification stage and a full application stage.
During the pre-qualification stage, businesses must provide basic information about their operations, including revenues, employment numbers, and business activities. The NJEDA will review the pre-qualification application to determine if the business is eligible to move on to the full application stage.
If a business is deemed eligible, it can move on to the full application stage.
During this stage, the business will need to provide more detailed information about its operations and how it plans to use the funds provided by the program. For example, applicants must provide a purchase quote, order proforma, and/or an equipment listing and obtain a tax clearance certificate.
The grant application must be submitted, reviewed, and approved by the NJEDA and the NJMEP before signing a contract, placing a purchase order, making a deposit, or making any other type of commitment related to the project to be eligible for the grant program.
Applications are accepted on a rolling basis until all funds are committed.
It’s important to note that the New Jersey Manufacturing Voucher Program (MVP) is a pilot program. To fully understand any potential tax implications for your business of receiving such a grant, we highly recommend consulting with tax professionals (like us!) to ensure you comply with all applicable tax laws and regulations related to the MVP.
However, and speaking only broadly, COVID-related grants are generally not considered taxable income in New Jersey. They should not be reported as income on the New Jersey Gross Income Tax and Corporation Business Tax returns.
Concerning other types of grants not providing COVID relief, there is no specific category of taxable income that such grants would fall into under New Jersey Gross Income Tax, so these grants are also generally not taxable and, in many cases, needn’t be reported as income on a New Jersey Gross Income Tax return.
For Corporation Business Tax, if the other types of grants not providing COVID relief are included in federal taxable income, they are included in the entire net income pursuant to NJSA 54:10A-4(k) and should be reported as income on a New Jersey Corporation Business Tax return.
There may be other tax implications that vary depending on the individual circumstances of your business. As always, speaking to a tax professional is the only way to be sure.
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Jeff Coyle, CPA, Partner of Rosenberg Chesnov, has been with the firm since 2015. He joined the firm after 20 years of business and accounting experience where he learned the value of accurate reporting, using financial information as a basis for good business decisions and the importance of accounting for management.
He is a diligent financial professional, able to manage the details and turn them into relevant business leading information. He has a strong financial background in construction, technology, consulting services and risk management. He also knows what it takes to create organizations having built teams, grown companies and designed processes for financial analysis and reporting.
His business experience includes:
Creating and preparing financial reporting, budgeting and forecasting.
Planning and preparation of GAAP and other basis financial statements.
Providing insight on financial results and providing advice based on those results.
Jeff also has a long history of helping individuals manage their taxes and plan their finances including:
Income tax planning and strategy.
Filing quarterly and annual taxes.
General financial and planning advice.
Prior to joining the firm in 2015, Jeff was in the private sector where he held senior financial and management positions including Controller and Chief Financial Officer. He has experience across industries, including construction, technology and professional services which gives him a deep understanding of business.
Jeff graduated from Montclair State University, he is a CPA and member of the American Institute of Certified Public Accountants, New York State Society of Certified Public Accountants and New Jersey State Society of Public Accountants.
Jody H. Chesnov, CPA, Managing Partner of Rosenberg Chesnov, has been with the firm since 2004. After a career of public accounting and general management, Jody knows the value of good financials. Clarity, decision making, and strategy all start with the facts – Jody has been revealing the facts and turning them into good business results for more than three decades.
He takes a pragmatic approach to accounting, finance and business. His work has supported many companies on their path to growth, including helping them find investors, manage scaling and overcome hurdles. His experience and passion for business reach beyond accounting and he helps businesses focus on what the numbers mean organizationally, operationally and financially.
He has a particular expertise in early-stage growth companies. His strengths lie in cutting through the noise to come up with useful, out of the box, solutions that support clients in building their businesses and realizing their larger visions.
Prior to joining the firm in 2004, Jody was in the private sector where he held senior financial and management positions including General Manager, Chief Financial Officer and Controller. He has experience across industries, which gives him a deep understanding of business.
Jody graduated with a BBA in Accounting from Baruch College, he is a CPA and member of the American Institute of Certified Public Accountants and New York State Society of Certified Public Accountants.
In addition to delivering above and beyond accounting results, Jody is a member of the NYSCPA’s Emerging Tech Entrepreneurial Committee (ETEC), Private Equity and Venture Capital Committee and Family Office Committee.
He is an angel investor through the Westchester Angels, and has served as an advisor for many startup companies and as a mentor through the Founders Institute.
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