Small Business Recovery Loan Fund
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- Please read eligibility program information below before starting an application.
- Businesses that received a Small Business Recovery Loan in 2020 are eligible to apply to refinance their loan to receive a larger amount and a longer loan term.
New Mexico for-profit and nonprofit businesses are eligible if they:
- Had an annual net revenue of less than $5,000,000 in tax year 2019 or 2020. Net revenue is defined as gross revenue minus the cost of goods sold; AND
- Experienced a substantial disruption or substantial decline in gross revenue. Most businesses will be eligible based on the substantial disruption definition. See below for information.
For-profit businesses must also be at least 51% owned by New Mexico residents, or be a business that is located in New Mexico that employed at least ten full-time New Mexico residents at any time since January 1, 2019. If a sole proprietorship, the business assets must be owned or leased by a New Mexico resident.
Nonprofit organizations must be governed by the New Mexico Nonprofit Corporation Act; and be designated by the IRS as a 501(c)3, 501(c)6, 501(c)8, 501(c)19, or 501(c)(23).
Substantial Disruption and Substantial Decline
A substantial disruption is defined as any one of the following:
1. Closure for 14 or more cumulative days any time after March 16, 2020; or
2. A reduction in operations for at least 30 days any time after March 16, 2020; or
3. A reduction in force or lay-off of at least 20% of the business’s employees at any time between December 31, 2019 to present; or
4. A 20% increase in cost of goods sold or other operating expenses as evidenced by federal tax returns for tax years 2019 and 2020.
A substantial decline in gross revenue is defined as one of the following:
1. A decline in the business’s gross receipts by more than 20% in 2020 compared to that same period in 2019, as shown on CRS reports submitted to the NM Taxation and Revenue Department; or
2. For businesses that are exempt from gross receipts tax, a decline in gross revenue by more than 20% in 2020 compared to 2019, as determined by federal tax returns.
- The interest rate is equal to one-half of the Wall Street Journal prime rate on the date the loan is closed. The interest rate is fixed for the term of the loan.
- The loan term will be ten years unless a shorter term is requested by the applicant.
- No interest will accrue for the first year.
- No payments will be due the first year.
- Interest-only payments will be due on the second and third anniversary dates of the loan.
- After the third year, principal and interest payments will be due monthly. Borrowers with sufficient credit may request an alternative payment schedule.
- The loan may be paid off in advance with no pre-payment penalty.
How much can I borrow?
You may choose a loan amount up to three times your average adjusted monthly business expenses from 2019 or 2020, not to exceed $150,000.
How are the average adjusted monthly business expenses calculated?
The average adjusted monthly business expenses may be calculated using information from the business’s 2019 or 2020 tax return or by using financial information from 2021. The business can choose which year it wants to include. The expenses would be calculated in one of the following ways:
1. The business’s total expenses excluding depreciation as determined from the business’s federal income tax return for taxable year 2019 or 2020, divided by the number of months in operations during the respective tax year; or
2. The business’s total expenses excluding depreciation for three months in tax year 2021 as reported by the business and evidenced by an income statement and a bank statement.
Use of Loan Funds
How may the loan funds be used?
Eligible expenses include ordinary and necessary business expenses, including capital expenses; making adaptations or improvements necessary to protect the public health; and acquiring or improving assets necessary to develop or grow the business’s e-commerce capacities.
For businesses that have employees, a minimum of 80% of the loan funds must be used for eligible expenses and a maximum of 20% may be used for owner compensation. For non-employer businesses, a minimum of 50% of the loan funds must be used for eligible expenses and a maximum of 50% may be used for owner compensation.
When can I apply?
- The application will open at noon on May 4, 2021 and be open until noon on December 31, 2022.
- The loan applications will be processed on a first-come, first-served basis.
How do I apply?
- The application will be available online at nmfinance.com.
- The application will require to you set up an account, which will allow you to save your application in progress. This means you can work on your application, save your work, and return to the application to complete it and submit it. The application must be submitted by an Authorized Officer, as defined below.
Can I see where my application is in the process?
Yes. After you submit your application, you will be able to log into your account to see where your application is in the process. Your application will be in one of the following stages: submitted, in review, approved, declined, funding pending, or funded.
Will a credit report be reviewed as part of the loan application?
Yes. A credit report for the business will be reviewed as part of all loan applications. To be eligible for a loan, the credit report must be free of any creditor collection efforts or creditor charge-offs from telecommunications, utilities or rent creditors in calendar year 2019. Additionally, NMFA will utilize enhanced technology in order to verify applicant identity.
For applicants seeking greater than $75,000, the credit report must meet the above requirements and a personal guarantee is required for the amount above $75,000. If the credit report has credit collection efforts or creditor charge-offs in calendar year 2019 other than those described above, the applicant will be required to provide collateral on the loan amount above $75,000.
What is the one-time passcode verification?
NMFA is using a system that may require you to answer additional questions to verify your identity. This system was implemented to guard against fraud and to protect the state’s investment in New Mexico businesses. In the application, you may need to provide a phone number and choose to receive either a text message or a voice message, after which you’ll be asked a series of questions that must be answered correctly before proceeding with the application.
I’ve never had a loan and don’t have much credit history. Am I still eligible to apply?
Yes. Lack of credit will not negatively affect your loan application.
What is an Authorized Officer?
An Authorized Officer is the person authorized by the applicant as having the requisite power and authority to sign the Officer’s Certificate and legally bind the applicant to its obligations under the Loan Agreement.
What are the required documents for a for-profit business?
- Copy of the business’s signed, filed federal tax return for taxable year 2019 or taxable year 2020 to evidence annual net revenue of less than $5 million. Net revenue is defined as gross revenue minus the cost of goods sold;
- Copy of the business’s signed, filed federal tax return for taxable year 2019 or taxable year 2020 to evidence average monthly expenses;
- Copy of the owner’s New Mexico driver’s license or a copy of the owner’s driver’s license from another state along with a recent copy of a New Mexico residential utility bill;
- Copy of the Authorized Officer’s driver’s license
- Additional documents to evidence substantial disruption or substantial decline (see below)
What are the required documents for a nonprofit organization?
- 2019 or 2020 IRS Form 990 to evidence annual net revenue of less than $5 million;
- 2019 or 2020 IRS Form 990 to evidence average monthly expenses;
- Certification statement that the information provided is true and accurate;
- Copy of the Authorized Officer’s driver’s license
- Additional documents to evidence substantial disruption or substantial decline (see below)
What additional documents may be required to evidence substantial disruption or substantial decline?
- If a business is eligible based on closure or reduction in operations due to the public health order, no additional documents are required.
- If a business is eligible based on a 20% decline in annual revenue or a 20% increase in cost of goods sold, the business must submit its 2019 and 2020 federal tax returns.
- If a business is eligible based on a 20% decline in gross receipts for a period in 2020 compared to 2019, the business must submit its CRS reports for the specific time period for both 2019 and
- If a business is eligible based on the 20% decline in employees, the business must submit its DWS ES903A report from any quarter in 2019 ending prior to December 31, 2019, and the DWS ES903A report from the same quarter in 2020 or 2021.
Note: The maximum file size is 25MB. For help, please review the “How to reduce the size of PDF files” in the Resources section at the right.
More information about Required Documents
Our business has multiple owners. Do I have to provide a driver’s license for each owner?
Not necessarily. Applicants where no single individual owns more than 20% of the business may submit a document that has been submitted to a state or federal agency listing the names and addresses of the owners, and the percentage of ownership for each.
Am I eligible to apply if my business files CRS reports quarterly or semi-annually instead of monthly?
Yes. Use the CRS report from the same periods (quarterly, semi-annual) for 2019 and 2020 to evidence the 20% decline in revenue. You may choose the time period that best evidences the decline.
Am I eligible to apply if my business is exempt from filing CRS reports?
Yes. You may use your 2019 and 2020 federal tax returns to evidence the 20% decline in revenue, if necessary.
We have filed an extension on the tax return for our business. May we use the extension instead of the actual return?
No. The actual signed and filed business tax return must be submitted in the application. If you have filed an extension, please apply for a Small Business Recovery Loan after you file your taxes. The loan application will be open until December 31, 2022 or until the funds are gone, whichever occurs sooner.
Refinancing an existing SBRLF loan
Note: All applicants, including those with a SBRLF loan from 2020, will need to create a new account with a user name and password.
If I got a SBRLF loan in 2020, can I refinance my loan under the new expanded terms?
Yes. You may refinance your SBRLF loan to obtain a longer term of up to ten years and/or a larger loan amount.
What would my loan amount be if I refinanced?
- You may choose a loan amount up to three times the average monthly business expenses as shown on your 2019 or 2020 federal taxes.
- This amount would be your total loan amount. It would not be another loan in addition to the previous loan.
- The maximum loan amount is $150,000.
Does refinancing simply add another month of the average monthly business expenses to my loan amount?
Not necessarily. These important changes will affect your loan amount:
- The previous maximum loan amount was $75,000; the new maximum loan amount is $150,000.
- Your average monthly business expenses may be determined by your 2019 or 2020 federal tax return. You may choose the year that has higher expenses.
Definition of a New Mexico Business
How is a New Mexico business or nonprofit corporation defined?
- If a sole proprietorship, 100% of the assets of the business are owned or leased by a New Mexico resident.
- If a corporation, partnership, joint venture, LLC, limited partnership, or other business entity, at least 51% of the total voting power and at least 51% of the total value of the equity is owned by one or more New Mexico residents.
- Nonprofit Corporation means a corporation which is designated as a Section 501(C)(3), 501(C)(6), 501(c)(8), 501(c)19 or 501(c)(23) entity by the Internal Revenue Service Code and subject to the provisions of the State Nonprofit Corporation Act.
My business does not have at least 51% ownership by one or more New Mexicans. Can I still apply for a loan?
Yes, if your business employed at least ten full-time employees who are New Mexico residents any time after January 1, 2019. You will be required to certify this in the application.
Definition of a New Mexico Resident
How is a New Mexico resident defined?
A New Mexico resident is defined as an individual who was domiciled in this state during any part of the year or was physically present in this state for one hundred eighty-five days or more during the taxable year. A domicile is the place where an individual has a true, fixed home, that is a permanent establishment to which the individual intends to return after an absence, and is where the individual has voluntarily fixed habitation of self and family with the intention of making a permanent home.
Collateral, Personal Guarantees
Are collateral and personal guarantees required?
For loan amounts of $75,000 or lower, no collateral or personal guarantees are required. Loan amounts above $75,000 will require a personal guarantee and may require collateral, depending on the credit history of the business. The personal guarantee for a loan amount above $75,000 must come from the business owner, partner, joint venturer, stockholder with greater than 20% ownership, or parent corporation.
Can I prepay the loan?
Yes, loan balances may be prepaid without penalty or premium at any time.
How do I make loan payments?
Borrowers will agree to register and repay their loans through NMFA’s online payment portal.
Is a new or start-up business eligible for a loan?
No. A business must have been in operation on or before March 2020 to be eligible to apply for a loan.
If I received a Small Business Recovery Loan from NMFA in 2020, can I refinance that loan based on the new terms in this loan program?
Yes, you can refinance your original SBRLF loan. Refinancing may allow you to have a longer loan term and/or a larger loan amount.
If I received a Small Business CARES Relief Grant from NMFA in 2020, can I apply for this loan?
If I’m planning to apply for a New Mexico LEDA Recovery Grant can I also apply for this loan?
Yes. Eligible businesses can apply to both programs. A business may find that a SBRLF loan can help it meet the job creation requirements in the LEDA Recovery Grants program.
Originally enacted by the New Mexico Legislature during the 2020 First Special Session, and expanded in the 2021 Session, the Small Business Recovery Loan Fund makes available nearly $500 million to provide loans to businesses that experienced financial hardship resulting from the pandemic.