Strict rules prevent businesses from accessing New Mexico’s loan program

SANTA FE, New Mexico (AP) – Only about $ 20 million of a $ 400 million loan program for New Mexico small businesses affected by the pandemic has been approved for sending since the the program started in August, according to the state agency that manages the program.

“We created the program with the expectation that about 5,000 requests would be processed. And it’s a much smaller volume than that, ”said Marquita Russel, CEO of the New Mexico Financial Authority, in a presentation to state lawmakers on Tuesday.

The low turnout saved the agency money on contractors, Russel said.

But it’s also a sign that the legislation isn’t reaching many small businesses. Fewer than 900 businesses have applied for loans under the program, which range from $ 500 to $ 75,000.

It is despite continued pain in the New Mexico economy where the unemployment rate of 11.3% in August was well above the national average of 8.4%, and businesses face occupancy limits ranging from 75% for hotels to 25% for restaurants.

Hundreds of applications were rejected.

About 85% of companies that were not eligible for the Small Business Recovery Loan Fund did not meet the requirement to post a loss of at least 30% of their income in April and May compared to the same period in 2019.

This included for-profit companies that already had “business in the hopper,” Russel said, even though they are now going bankrupt.

It also includes nonprofits that collect most of their money at other times of the year, and there is no flexibility in the program for companies that are less than a year old and not. therefore cannot compare income.

The fund provides two months of operating expenses to qualifying resident-owned entities at an interest rate of around 2%, with no payments required in the first year.

The chairman of the Investment and Pensions Oversight Committee, Senator George Muñoz, has asked for suggestions in the coming weeks on how to fine-tune the program to increase loan distribution.

“Because who knows what the economy will look like – if we’re going to see another surge in November,” said Muñoz, a Democrat representing Gallup.

Russel suggested creating more flexibility for the requirements. She added that 8% of applications were turned down for not meeting property requirements for residents, especially in counties bordering Texas, Colorado and Arizona.

The loan program is expected to end in December, although the funds have not been used.

State officials reported 316 new cases of COVID-19 on Tuesday, bringing the total number of cases this year to 30,947. Newly confirmed infections include a dozen teachers and two students in the public school system in six counties.

No new deaths were reported, leaving the death toll at 894.

For most people, the new coronavirus causes mild to moderate symptoms, such as fever and cough, which go away within two to three weeks. About 17,500 people diagnosed with COVID-19 in New Mexico have recovered, state officials say.

For some, especially the elderly and people with existing health problems, it can cause more serious illnesses, including pneumonia and death.

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Attanasio is a member of the Associated Press / Report for America Statehouse News Initiative corps. Report for America is a national, non-profit service program that places reporters in local newsrooms to cover undercover issues. Follow Attanasio on Twitter.