ALBUQUERQUE, N.M. — The spread of the new coronavirus has created unprecedented challenges for New Mexico small businesses, but they have a mix of state and federal resources to draw on to combat the virus’ impacts.
The U.S. Small Business Administration announced recently it is offering low-interest federal disaster loans to small businesses in certain communities, putting the coronavirus impacts on the same footing as a massive flood, wildfire or other natural disasters.
“This is the first time we’ve done something like this,” said Merico Zanotti, economic development specialist for the SBA’s New Mexico district office.
Each of New Mexico’s 33 counties have been deemed eligible for the program.
Additionally, New Mexico’s Economic Development Department added a program allowing the department to guarantee loans made by banks and other financial entities, and temporarily expanded the Local Economic Development Act to provide no-interest loans for qualifying companies.
Dan Schlegel, small business advisor for the governor’s office, said each of the programs are designed to give businesses decimated by the spread of the coronavirus a wide array of tools to help them recoup financial losses.
“We’re trying to put together a package for people to choose from,” Schlegel said.
Zanotti added that the SBA’s disaster loan program can be extended to any state or territory that shows it has at least five businesses that have been directly impacted by the virus.
In New Mexico, Schlegel said the governor’s office provided individual cases from nine counties.
The federal program allows small business and private nonprofits in designated areas to seek up to $2 million in assistance, pay fixed debts, payroll, and other bills that can’t be paid because of the virus’ impact.
Zanotti said the interest rate for small businesses is 3.75%, considerably lower than most bank loans. The rate for nonprofits is 2.75%.
On the state side, the state’s economic development department re-directed funding from its Collateral Assistance Program to provide loan guarantees, according to Johanna Nelson, finance development specialist for the Economic Development Department.
Nelson said the program allows the department to guarantee a loan to a small business if the small business defaults. The program covers up to $50,000, or 80% of the loan principal, Nelson said.
The state also now allows companies that meet the requirements to receive LEDA funding to apply for loans with a 0% interest rate. Mark Roper, division director for the department, said the program covers expenses related to land, building, and infrastructure, and can also be used for lease abatement or mortgage assistance.
Roper said the program is in place for “the forseeable future.”
“I don’t see a hard end point,” he said.