NM business loan fund is returning, with changes

Program retooled to loosen restrictions, eligibility rules

A state loan program that launched last year to help businesses hurt by the pandemic will soon be returning, with a new influx of state money and expanded eligibility requirements.

Starting April 29, businesses and nonprofits that have been impacted by the pandemic and associated shutdowns can apply for loans through the state’s newly revamped and expanded Small Business Recovery Loan Fund. Marquita Russel, CEO of the New Mexico Finance Authority, the entity charged with administering the program, said during a webinar Wednesday that the program has been tweaked to provide larger loans, with less restrictive eligibility requirements.

“We think that the state’s going to find significant payoff from the investment it’s making in your small businesses,” she said.

The state launched the loan fund last summer, allocating $400 million from the state’s Severance Tax Permanent Fund.

However, much of the funding went unused, and Gov. Michelle Lujan Grisham acknowledged in September that many businesses couldn’t meet the application requirements.

To date, just over $40.5 million has been allocated to 890 New Mexico businesses through the program, according to NMFA’s website.

The program was retooled during the legislative session. Lawmakers approved Senate Bill 3, which establishes a $500 million loan program with a looser set of restrictions and eligibility requirements.

“It increases, substantially, the access to the loan fund, and offers businesses and nonprofits enhanced loan terms,” Russel said.

Russel said the program now offers loans covering up to three times monthly business expenses. Maximum loans can now reach $150,000, compared to $75,000 during the first round.

On the eligibility side, the revamped program allows more types of nonprofits to apply, and opens the program up to businesses with less than $5 million in net revenue, rather than gross revenue.

Businesses must be 51% New Mexico

owned, down from 80% in the first round. Businesses that aren’t owned by New Mexicans but employ at least 10 full-time New Mexico residents are also eligible.

“Simply stated, more businesses are now eligible,” Russel said.

Businesses may now use the loan for purchasing or improving assets that help grow a business’ e-commerce capacity. Additionally, interest doesn’t begin accruing during the first year of the loan, under the new terms. To qualify, Russel said businesses, nonprofits and sole proprietors must demonstrate that they suffered either a 20% decline in business revenues or gross receipts in 2020, or experienced a “substantial disruption in operations” during the pandemic.

Businesses must provide a valid ID and 2019 or 2020 tax returns, and may be asked to provide additional documentation, Russel said.

Russell said NMFA is concerned about fraud with the program, and will be requiring applicants to meet certain credit and identification standards.

“As online pandemic financing has become more prevalent across the nation, there have been more bad actors, fraudsters, who want to take advantage of these streamlined systems,” she said.