Hundreds of Businesses Get Small Business Recovery Act Loans
Nearly 500 New Mexico businesses have been approved for loans under the Small Business Recovery Act of 2020, members of the New Mexico Financial Authority (NMFA) Oversight Committee learned at a meeting on Friday. Virtual.
The committee, made up of members of the New Mexico legislature, examined the state’s economic development during the COVID-19 pandemic.
The Small Business Recovery Act was passed in a special legislative session in June and was enacted on July 7 by Governor Michelle Lujan Grisham.
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The law allocated $ 400 million in funds from the New Mexico State Severance Tax Fund to provide loans to New Mexico businesses and nonprofits that have experienced financial hardship due to the resulting public health order. of the COVID-19 pandemic, read a news item from the State of New Mexico Release.
According to Adam Johnson, head of program operations for NMFA, the average loan amount was $ 46,754 as of October 8.
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The smallest loan was $ 582 and the largest loan was $ 75,000, Johnson said.
He said 22% of inquiries came from the accommodation and food services industries in New Mexico, followed by retail at 19% and arts, entertainment and recreation at 10%.
Qualifying businesses and nonprofits can borrow twice their average monthly expenses up to a maximum of $ 75,000. The measure fixes the interest rate at half the prime rate on the day the loan is made. The initial loan term is three years, with interest payments only for the first three years.
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The loan program is limited to businesses and nonprofits with 2019 annual gross income of less than $ 5 million and whose April and May 2020 revenues have fallen by 30% or more from the same. months in 2019.
Online application and more information about the program are available at www.nmfinance.com.
During Friday’s meeting, State Senator Joseph Cervantes (D-31) expressed concerns about the tax implications and the rate of default of the law.
“Both in terms of the number of defaults as a percentage of loans granted, and then perhaps the rate of default on the percentage of dollars actually loaned,” he said.
NMFA chief executive Marquita Russel said the organization had no expectations of volume or demand, let alone defaults.
“I know the Legislative Finance Committee (LFC) had just an idea of the impact if things went wrong, I don’t know of any default rate projections that were made with clear education about it,” he said. she declared. noted.
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Cervantes said that since the money is being used from the severance tax fund, the state has an obligation to see a return to that fund.
State Senator Ron Griggs (R-34) has suggested that fraternal organizations like Elks Lodge, Moose Lodge and Veterans of Foreign Wars could use the help of the law.
“These guys weren’t eligible for any help, I think, neither federal nor state and really put a lot of them in a bind. So if we can consider adding them to those that might be available we should see if there is a way because these guys don’t have a lot of income streams if we can help them we should. “, did he declare.
The committee was compiling comments for the pandemic and budget recommendations for fiscal year 2022.
Mike Smith can be reached at 575-628-5546 or by email at [email protected] or @ArgusMichae on Twitter.