New Jersey Enacts Employee Ownership Finance Legislation with Support from Lafayette Square Institute
New Jersey has passed bipartisan legislation to support the transition of businesses to employee ownership through a new program managed by the New Jersey Economic Development Authority (NJEDA). Governor Mikie Sherrill signed A5016/S4218 on September 4, establishing an Employee Ownership Transition Program and Revolving Loan Fund. The initiative includes feasibility study reimbursements, consultative services, outreach efforts with Rutgers University’s NJ/NY Center for Employee Ownership, and direct financing of conversions. The legislation is based on recommendations from the Lafayette Square Institute's (LSI) white paper titled 'Employee Ownership as Economic Development,' which outlines strategies to expand employee ownership through credit enhancement, institutional capital mobilization, and tax incentives. The Revolving Loan Fund revives a tool NJEDA used successfully in 1976 when financing an employee buyout of the Okonite Company. The program aims to address business succession challenges as owners retire while adapting to economic shifts like AI-driven labor changes. It is designed without new taxes or mandates, making it broadly supported across party lines.
