New Jersey Enacts Comprehensive Employee Ownership Finance Legislation Designed with Lafayette Square Institute

Gov. Sherrill signs bipartisan package establishing Employee Ownership Transition Program and revolving loan fund at NJEDA; LSI releases state playbook laying out a development finance toolkit for states

TRENTON, N.J., Sept. 22, 2026 /PRNewswire/ -- New Jersey has enacted comprehensive bipartisan legislation that equips the New Jersey Economic Development Authority (NJEDA) with tools to finance the conversion of businesses to employee ownership. Gov. Mikie Sherrill signed the legislation (A5016/S4218) on September 4, establishing an Employee Ownership Transition Program at NJEDA with reimbursements for feasibility studies, consultative services for firms making the transition, statewide outreach in partnership with the NJ/NY Center for Employee Ownership at Rutgers University, and an Employee Ownership Revolving Loan Fund to finance conversions directly. State Senators Andrew Zwicker and Shirley Turner and Assemblymembers Lisa Swain, Roy Freiman, and Al Barlas sponsored the legislation.

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Lafayette Square Institute was proud to support partners in the New Jersey legislature, Governor Sherrill's office, and NJEDA to achieve this outcome in the Garden State. The legislation builds directly upon recommendations from Lafayette Square Institute's flagship employee ownership state policy white paper titled Employee Ownership as Economic Development released earlier this year at the National Conference of State Legislators annual convening. The publication details a toolkit for states to expand employee ownership including credit enhancement, institutional capital mobilization, and tax incentives. The playbook also evaluates various strategies to capitalize and fund various tools, build institutional capacity within state government, and implement a comprehensive employee ownership strategy.

The Employee Ownership Revolving Loan Fund revives a tool NJEDA pioneered 50 years ago, when the agency's first loan financed the employee buyout of the Okonite Company in Passaic County, New Jersey. That loan was repaid and revolved ninefold. Today, Okonite remains 100% employee-owned and has paid more than $300 million in ESOP distributions to its workers. The Fund can be capitalized by state appropriations, federal sources such as U.S. Economic Development Administration grants, and philanthropic capital.

"Governor Sherrill is committed to expanding resources for sustainable business transition plans and employee ownership, protecting jobs, strengthening communities, and creating economic opportunities for workers and their families" said NJEDA Chief Executive Officer Evan Weiss. "We are proud to partner with the Lafayette Square Institute and the NJ/NY Center for Employee Ownership at Rutgers University to ensure the NJEDA's Employee Ownership Transition Program will provide effective support for entrepreneurs, furthering the Administration's objective of making New Jersey the best state in the nation to start and grow a business."

"New Jersey is living through two economic transitions at once: a generation of business owners reaching retirement without a succession plan, and artificial intelligence changing who gains from work. Employee ownership addresses both challenges by keeping companies rooted in our communities and giving the people who build a business a share in what it earns. Lafayette Square Institute brought us this model and the evidence behind it, and this law equips EDA with the tools to use it," said Senator Andrew Zwicker (D-16).

"This bill is bipartisan for a simple reason: it keeps New Jersey businesses in New Jersey hands without a new mandate or a new tax," said Assemblyman Al Barlas (R-40). "A revolving loan fund lends, gets repaid, and lends again, which is how the EDA helped Okonite's workers buy their company fifty years ago. Lafayette Square Institute built this concept on that record, and I was glad to help put it back to work."

"When you align the financial success of a business with the success of the employees who help run it every day, the benefits are limitless. Employee stock ownership programs offer workers a meaningful path to financial security, while giving local business owners a better way forward in preserving the companies they have worked so hard to build and that make New Jersey flourish," said Assemblywoman Lisa Swain (D-38). "I'm deeply grateful to Lafayette Square Institute, the NJ/NY Center for Employee Ownership, and the employee owners who helped us get this done."

"At a moment when returns to capital are pulling away from returns to labor, employee ownership puts workers on both sides of the ledger. New Jersey has now built the financing tools to do just that, and this playbook shows every other state how to do the same," said Julien Rosenbloom, Senior Associate at Lafayette Square Institute.

"This bipartisan legislative accomplishment is an exciting win for the Garden State at a moment of historically unprecedented business succession across the country," said Jack Moriarty, Executive Director of Lafayette Square Institute. "By integrating employee ownership into the economic development toolkit, we can preserve and create jobs that build wealth for American workers and families."

"The evidence from decades of research is consistent: employee-owned companies pay more, keep workers longer, build more retirement wealth, are more productive, and weather downturns with fewer layoffs. The New Jersey/New York Center for Employee Ownership looks forward to partnering with NJEDA so that every owner considering a sale knows selling to employees is a real option. We congratulate Governor Sherrill, Senator Zwicker, and Assemblywoman Swain on this important step," said William Castellano, Executive Director, New Jersey/New York Center for Employee Ownership, Rutgers School of Management and Labor Relations.

About Lafayette Square Institute

Lafayette Square Institute is a nonprofit policy and data analytics platform committed to aligning private capital with the public interest. Through deep bipartisan relationships, innovative finance tools, and data analysis, LSI mobilizes investment in the people and places that need it.

Media Contact:
Julien Rosenbloom
Lafayette Square Institute
[email protected]

SOURCE Lafayette Square Institute