Copyright © 2020 Albuquerque Journal
SANTA FE – A New Mexico Recovery Fund aimed at helping businesses stay afloat during the coronavirus outbreak will make loans of $500,000 to $10 million to businesses that employ at least 40 workers and meet other qualifying criteria, under a plan approved by the State Investment Council.
The SIC, which had voted last month to approve the idea of the new fund, voted 10-0 Tuesday to ratify the fund’s final framework.
“As we battle the pandemic, we’ve got to explore every avenue for both protecting public health and assuring economic relief for affected businesses and individuals,” said Gov. Michelle Lujan Grisham, who chairs the investment council.
The governor had urged the SIC to act quickly to approve the new fund, citing the fragile condition of many businesses due to state-mandated closures that have been ordered in an attempt to slow the spread of the new coronavirus.
The New Mexico Recovery Fund will make up to $100 million from one of the state’s large permanent funds available for short-term business loans.
Interest rates will range from 3% to 10%, depending on the business. Those rates are lower than previously proposed, after some SIC members raised objections.
In addition, certain restrictions will be placed on the loan funds, including a limit on executive bonuses and a stipulation that at least 80% of the money be spent in New Mexico.
Businesses that receive the loans will have a two- to four-year payback period, and certain penalties could be levied if businesses do not pay back the loans on time.
“These are not grants, and there is no forgiveness-of-debt mechanism in this fund,” State Investment Officer Steve Moise said during Tuesday’s meeting, which was held by telephone in keeping with the governor’s ban on large public gatherings.
The new loan program, funded by the roughly $5 billion Severance Tax Permanent Fund, is one of several economic relief initiatives being crafted by state and federal leaders in an attempt to assist businesses during the COVID-19 pandemic.
Sun Mountain Capital in Santa Fe, which manages the SIC’s direct private equity investments in companies, will also manage the new fund.
Brian Birk, the managing partner of Sun Mountain Capital, said Tuesday that the first loans from the fund could be issued in the coming weeks.
Meanwhile, Charles Wollmann, a spokesman for the State Investment Council, said the names of businesses that receive the loans will be publicly disclosed, as will the aggregate loan amounts.
But he said individual loan terms and conditions may be kept private until the loans are paid back.