Enchantment State News

New Mexico lawmakers have earmarked $100 million to help small businesses stay afloat during the COVID-19 pandemic, but the leader of an organization that advocates for business owners said the lending program misses the mark.

“It will be helpful to some businesses but predominantly what we're hearing from owners is that they're struggling and even though it's a low-interest loan, what they want more than anything is to be able to just get their business moving again rather than borrowing money,” New Mexico Business Coalition President Carla Sonntag told Enchantment State News. “It's hard for them to imagine that they’re going to have the revenue later if they don't get back to work.”

According to the U.S. Office of Small Business Administration, New Mexico is home to about 160,000 small businesses that employ approximately 340,000 workers.

NMBC President Carla Sonntag | https://nmbizcoalition.org/

Sonntag noted that the $100 million will be allocated from the severance tax permanent fund. However, whether $100 million is enough money to sustain 160,000 small businesses throughout the state, Sonntag said depends on the amount New Mexico is loaning per business.

“What owners predominantly want is just to get back to business safely,” Sonntag said. “Nobody at all is suggesting that we just barrel through with no safeguards. We would rather deal with the reality of what is happening and to safely get businesses operating again.”

The Small Business Recovery Act of 2020 creates the Small Business Recovery Loan Fund, providing loans for businesses that have less than $5 million in revenue and are experiencing financial hardship due to Democratic Gov. Michelle Lujan Grisham's public health orders.

The New Mexico Department of Public Health had reported 23,500 coronavirus cases and 718 deaths as of Aug. 17.

“After the complete shutdown in March, the governor had opened certain businesses up at limited capacities, but then she just shut down restaurants again even though they were compliant,” Sonntag said. “They were wearing masks, they had six feet of distance between the tables and they were at the capacity of whatever she required at that time, 255 or 50%. We haven't seen evidence that anybody got COVID from being in a restaurant.”

Unlike the federal Paycheck Protection Program, lending under New Mexico’s Small Business Recovery Act of 2020 is not forgivable.

“This will have to be repaid,” Sonntag said. “It cannot be a grant and it cannot convert to a grant because of the anti-donation clause in our state constitution. So, they're trying to minimize it but it does need to be repaid with interest.”

The projected interest is one-half of The Wall Street Journal prime rate on the date the loan is approved, according to the loan application website.

To qualify, recipients must be a New Mexico for-profit business or nonprofit corporation that has closed or reduced operations due to a 30% decline in monthly gross receipts or monthly revenue in April and May 2020 compared to last year.