A common refrain when it comes to New Mexico’s economy is the need to diversify from government and grow the private sector. The New Mexico Small Business Investment Corp. is helping a lot of New Mexicans do just that.
According to a Monday Business Outlook story by Journal reporter Kevin Robinson-Avila, the nonprofit has been churning out loans with government money to small businesses via various microlending organizations for 18 years.
By way of recycling loans repaid with interest for nearly two decades, the SBIC has used $47 million from the Severance Tax Permanent Fund to finance about $82 million worth of loans through microlenders, much of that money making its way to recipients who might have otherwise been unable to get credit from traditional lenders. This year, lawmakers gave the go-ahead to infuse an additional $52 million into the SBIC to further pump up the small-business pipeline.
Based on 18 years’ worth of data, this is both a good idea and a sound investment. The SBIC’s history is a classic microlending success story, with a government-backed twist.
Some metrics of SBIC’s success: Borrowers availing themselves of SBIC funds through microlenders have made good on their loans at astonishing rates given the newness of their endeavors – 95% in the case of loan agency Accion, and 98.5% in the case of The Loan Fund.
And that means successful businesses, which in turn means jobs. Last year, the nonprofit tallied its funds and found it has supported 12,323 jobs in 31 of the state’s 33 counties since its founding in 2001.
Barbershops. Private security firms. Restaurants. Unique funeral service providers. All sorts of small businesses that make up New Mexico’s colorful private-sector landscape have taken the loans and run with them. One case study is Cervantes Food Products Inc., the Albuquerque chile sauce and salsa producing company that got a $12,000 loan from Accion back in 2011 to expand operations. It followed up with two other loans. Now, owners Arian and Richard Gonzales have leveled up to a traditional lender to buy a building in Los Lunas triple the size of their existing facility.
That’s real growth that translates to private wealth and a healthy economy. N.M. taxpayers should take heart the state is devoting more dollars to a program that not only works, but diversifies the economy while putting New Mexicans to work.
This editorial first appeared in the Albuquerque Journal. It was written by members of the editorial board and is unsigned as it represents the opinion of the newspaper rather than the writers.