How to Apply for a Small Business Loan in New Mexico

New Mexico

Since the COVID-19 crisis began, New Mexico has implemented several measures designed to help small businesses weather the storm. In addition to utilizing the resources made available through the SBA (specifically, the Paycheck Protection Program and the Economic Injury Disaster Loan), impacted businesses can also benefit from the extra funding made available to lenders via the New Mexico Small Business Investment Corporation. If you’re a small business owner whose revenue has been affected by the pandemic, here’s how to apply for a small business loan in New Mexico.

The Paycheck Protection Program

The Paycheck Protection Program came into force in March 2020 with the intent of providing cash relief to small businesses struggling as a result of the pandemic. After the huge initial uptake exhausted funds within a matter of weeks, the program was put on hold. Thankfully, it’s now back in action after the government injected a further $320 billion into the program with the Paycheck Protection Program Increase Act.

The loan program has been created with the specific intent of incentivizing small businesses to retain their workforce. If a business uses at least 75% of the loan funds toward maintaining their current workforce, and does not lose any numbers from its existing staff for 8 weeks after the loan origination, both the principle of the loan and any accrued interest will be forgiven. The remainder of the funds are expected to be used against other crucial costs such as business rent and mortgage interest payments, business utilities, and fixed debts.

Loan Terms

Loans can be borrowed at 2.5 times the average monthly payroll costs, up to a maximum of $10 million. Interest rates are fixed at 1% and the maximum loan term is 2 years. Payments can be deferred by 6 months, but interest begins to accrue from day one. Neither the government nor the SBA will apply any fees for the loan, and there are no penalties for early re-payment. No collateral or personal guarantees are needed.

Who Can Apply for the Paycheck Protection Program?

To apply for the PPP, you’ll need to confirm your business has suffered a substantial financial impact as a result of the COVID-19 crisis. If it has, the SBA is inviting any enterprises that meet the following criteria to apply:

A small business concern that meets SBA’s size standards (either the industry based sized standard or the alternative size standard)Any business, 501(c)(3) non-profit organization, 501(c)(19) veterans organization, or Tribal business concern (sec. 31(b)(2)(C) of the Small Business Act) with the greater of:

  • 500 employees, or
  • That meets the SBA industry size standard if more than 500
  • Any business with a NAICS Code that begins with 72 (Accommodations and Food Services) that has more than one physical location and employs less than 500 per location
  • In addition, sole proprietors, independent contractors, and self-employed persons are welcome to apply.

How Can I Apply for the Paycheck Protection Program in New Mexico?

To apply for the Paycheck Protection Program in New Mexico, you will need to apply directly through an existing SBA 7(a) lender, a federally insured depository institution, a federally insured credit union, or a Farm Credit System institution. If you’d like to check whether your preferred lender is approved for the program, or if you require any assistance in finding a local lender, check out the SBA’s Paycheck Protection Program lender search tool. After you’ve chosen a lender, you’ll need to download and complete the PPP borrower application form from the SBA website and submit it, along with your payroll records, to your preferred lender.

The Economic Injury Disaster Loan

Like the PPP, the Economic Injury Disaster Loan (EIDL) is designed to assist small businesses that have been adversely affected by the crisis. Applications can be made for the EIDL even if you’ve already received a PPP loan: providing the loan funds are used for different purposes, the SBA doesn’t restrict dual applications.

Loan Terms

EIDL loans are available up to a maximum of $2 million. Loan terms are up to 30 years, and interest is fixed at 3.75%. During your application, you’ll be asked if you’d like to receive up to $10,000 as a forgivable advance. Advances are paid within 3 days of loan acceptance directly into your preferred bank account.

Who Can Apply for the Economic Injury Disaster Loan?

At the moment, the SBA is limiting new applications to agricultural businesses with 500 or fewer employees who are engaged in the production of food and fiber, ranching, and raising of livestock, aquaculture, and all other farming and agricultural related industries (as defined by section 18(b) of the Small Business Act (15 U.S.C. 647(b)). However, if further funding becomes available, it may reopen the program to other sectors.

How Can I Apply for the Economic Injury Disaster Loan in New Mexico?

All applications for the EIDL should be made directly through the SBA website (covid19relief.sba.gov). The application process is relatively simple, and shouldn’t take you more than around 2 hours to complete. If you do require any assistance while completing the application, contact SBA’s Customer Service Center at (800) 659-2955 or email disastercustomerservice@sba.gov.

Additional Assistance Through the New Mexico Small Business Investment Corporation

On March 23, 2020, the New Mexico Small Business Investment Corporation, a nonprofit organization funded by an allocation from the Severance Tax Permanent Fund, committed up to $25 million to assist New Mexico businesses impacted by the COVID-19 crisis. “Small businesses across the state, in nearly every sector of the economy, are suffering devastating losses,” Governor Lujan Grisham said. “We are tapping every resource we have, such as the NMSBIC, to provide relief to businesses during this unprecedented public health emergency.” As the NMSBIC does not offer loans directly, small businesses hoping to take advantage of the additional funds should contact one of its lending partners directly using the following details:

  • The Loan Fund is a nonprofit organization offering business loans up to $500,000.
  • DreamSpring is a nonprofit organization that offers loans throughout New Mexico.
  • LiftFund is a nonprofit organization offering loans of up to $500,000 to business owners and entrepreneurs in Southern New Mexico.

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