SANTA FE (KSMX)- Gov. Michelle Lujan Grisham signed legislation Tuesday that will offer $400 million in low-interest loans to small businesses and nonprofits in New Mexico that have endured economic damage as a result of the new coronavirus pandemic.
The Small Business Recovery Act of 2020 allocates $400 million from the state’s $5 billion Severance Tax Permanent Fund for loans to small New Mexico businesses and nonprofits and almost $50 million for loans to local governments. Eligible businesses and nonprofits may borrow two times their average monthly expenses up to a maximum of $75,000.
The measure sets the interest rate at one-half the prime rate on the day the loan is made. The initial loan period is three years.
“Small businesses are the backbone of New Mexico’s economy and the lifeblood of our communities. They’ve suffered greatly from this unprecedented pandemic emergency, and our state and our economy suffer from them,” Gov. Lujan Grisham said. “I will fight for small businesses and their recovery every single day and this measure, putting our state’s wealth to work in getting them back on their feet, is a significant step in the right direction.”
The loan program is limited to businesses and nonprofits with 2019 annual gross revenue of less than $5 million and whose April or May income dropped 30 percent or more compared to the same month in 2019. For a local government to be eligible, it must have experienced at least a 10 percent decline in operating revenue in the fiscal year 2020 due to the economic impacts of the coronavirus disease.
The New Mexico Finance Authority will administer the program. The legislation also freezes employer contribution rates to the unemployment compensation trust fund through December 31, 2021, stopping expected increases that would have taken effect next year.