State Tries To Fill Gaps Left By Federal Small Business Loan Programs
Small business owners are scrambling to stay afloat as the coronavirus pandemic slams all sectors of the economy. The state of New Mexico is putting programs in place to try and help, but access to federal grants and loans remains a frustrating mess. KUNM spoke with New Mexico Economic Development Secretary Alicia Keyes on Wednesday about how officials are trying to open the spigot for more money.
SECRETARY ALICIA KEYES: We call it the COVID-19 loan guarantee program, and businesses here can apply for a low-interest loan through their participating lender, and then the state acts as a guarantor for the loan up to 80% of the principal or a maximum of $50,000.
And then the second program we put in place was utilizing what we have, our LEDA (Local Economic Development Act) funds, which are funds that are designated by the legislature each year for us to do expansion and retention. And so we've been able to use some of these funds to do no-interest loans.
But because of statutory reasons, we can only do that for manufacturing companies or small retailers and communities with a population of less than 10,000. So it's a little bit more limited, but these loans can be used for expenditures for land and buildings and infrastructure. We've also put together a Web site and it’s BuyNMLocal.com. And this is a website where businesses can register their companies and offer through their PayPal accounts, vouchers for services in the future. And then yesterday, the State Investment Council also put in a loan program, and this is for businesses with more than 40 employees.
We're also really just digging in and trying to figure out how we can get the federal stimulus money to New Mexico.
KUNM: And that's what I wanted to ask you. What is the holdup in the rollout with the SBA funding?
SECRETARY ALICIA KEYES: This is obviously an unprecedented event and they just were not prepared for something like this. There have been issues with I.T., web sites crashing not only for companies, but for lenders. The other issue that we are hearing from the lenders is that some of the guidelines with regards to the forgiveable loan portion of the SBA grant, those guidelines weren't issued until last evening. And we still have another set of guidelines to come out and I think that the lenders and New Mexico are just a little bit nervous that the same thing that happened in 2008 is going to happen to them now.
So they are wanting to guarantee that the SBA is going to stand behind these loans. The big banks like Bank of America and Wells Fargo have reached their limit of what they're allowed to do. But what's happening right now is that our companies who are here, who are banking with those banks now, don't have a bank. And there are other lenders who are just not taking on new clients for a myriad of reasons.
So this is the situation we are in right now. We are we are going to do anything and every case thing we can on a state level, but the bulk of the funds that are going to come to businesses in New Mexico are going to come from the federal side.
KUNM: The longer this goes on, the more confusion, the more deadly it becomes for small businesses.
SECRETARY ALICIA KEYES Exactly. And what we are telling people is, you know, just be vigilant to keep on applying. We know that those websites are going down and crashing, but just keep on trying to find a lender. We have listed the lenders that are approved by the SBA that are actually participating.
You know, we are keeping businesses abreast of the lenders that we here are taking on new clients. We're really trying to do as much as we can on the state level to help companies access those federal dollars.
KUNM: What about the future?
SECRETARY ALICIA KEYES: Prior to COVID-19 happening, we were just seeing the New Mexico economy take off in certain sectors and people were desperate to move here. And we were doing, you know, deals every single week, which was fantastic. That hasn't actually stopped. People are still wanting to move to New Mexico even more so now because they don't necessarily want to be in big cities. So we do have those tools.
Do we need to sit down at some point in the next few weeks and just say what is our new normal? Absolutely.
How are things going for you? We want to know. Share your quarantine stories by calling: (505) 218-7084 and leaving us a message. We could roll them into a future episode.
This is an excerpt from a longer interview that originally aired on our show Your NM Government. Catch it every weeknight at 7:30 p.m. here on KUNM, or find it wherever you get your podcasts. Your NM Government is a collaboration between KUNM, New Mexico PBS and the Santa Fe Reporter.
Edited by Megan Kamerick