Part 2 in this series on funding small businesses in New Mexico includes:
loans to fund small businesses
If you have good credit and a business plan, there are some clear pros to funding your small business with a loan from a financial institution.
Banks don't try to tell you how to run your business.
They don't take any of the profit.
They don't own any part of the business.
They are easier to access than investors.
The interest payments tend to be tax deductible.
There can be significant cons to bank loans, too. Banks have historically funded wealthier white men. Minorities are half as likely to start a business with the support of a bank loan. This March 2022 article by CNBC points out that:
"The pandemic highlighted inequities in lending, with minority-owned businesses getting funding from programs like the PPP at lower rates than white counterparts."
(This minority woman business owner, whose business was developed to support small business owners, could not even get a response or acknowledgment of my SBA loan applications submitted during the pandemic.)
It can be extremely difficult to get a loan through a bank, especially if you have a credit score below 700, if you have low cash flow, if you lack collateral, or if it's your first business or a business that is just starting up. It's quite shocking that banks are so narrow-minded about this, considering the impact small businesses have on the economy.
Thankfully, banks are not the only type of institution that offers business loans. Credit Unions tend to approve more small business loan requests than big banks. There are many nonprofits that provide loans - particularly to those with poor credit or who are from a marginalized demographic (see the next section on Micro-Financing.) And, there are many government agencies that offer small business loans.
LOAN VARIATIONS
Here are several different ways you might make debt-based financing work for you.
EQUIPMENT FINANCING
A bank loan can be unsecured or secured using collateral. An example of a secured loan is equipment financing, where a bank can loan you as much as 100% of the value of your equipment and you pay it back over time, with interest. But you're at risk of losing that equipment if you default on your loan.
INVOICE FACTORING / INVOICE FINANCING
With invoice factoring, you sell unpaid customer invoices to a company who then collects the payments from the customers. You get more control with invoice financing. The bank gives you a loan/cash advance based on your customer invoices, but you collect the payments on those invoices. You pay back the loan with the customer payments.
MEZZANINE FINANCING
Mezzanine Financing is a cross between a loan and investment. It is a type of secured loan because you only have to give up partial ownership in the company if you default on your loan payments.
PERSONAL LOANS
If you do not qualify for a business loan, you might consider a personal loan used for business. In this situation, lenders consider your personal credit score and income instead of your business history. Depending on your credit, these loans are easier to get but may have a higher interest rate.
ALTERNATIVES TO BANK LOANS
If you've been in business a while, you may be able to look to customers or suppliers for a loan or investment.
Friends or family are also options - as long as you are completely confident that both you and they are able to mix personal with business. Take the request as seriously as any other. Make a pitch that includes a set timeline for payments and the amount of interest to be paid.
NEW MEXICO BUSINESS LOAN OPTIONS
Here is a list of lenders who offer assorted business loans to New Mexico businesses. This list is not comprehensive, but it's a great start.
Capital Certified Development Corporation
CCDC funds small businesses in Texas and New Mexico.
Change Labs
Located in Tuba City on the Navajo Nation, Change Labs provides Native-owned small businesses with business development support, workspaces, tools, mentorship and loans.
Clearinghouse Community Development Financial Institution
Clearinghouse CDFI finances direct loans for affordable housing, community facilities, small businesses, and commercial real estate. Loan types include construction, acquisition, renovation, expansion, and refinance. Here is the information about their small business loans
Community Reinvestment Fund
Founded in 1988, Community Reinvestment Fund is a national nonprofit with a mission to empower people to improve their lives and strengthen their communities through innovative financial solutions. As a leading Community Development Financial Institution (CDFI), CRF supports mission-driven organizations through the development of products and services aimed at increasing the flow of capital to historically underinvested communities across the country.
DreamSpring
DreamSpring is a nonprofit that increases access to credit, loans, and resources. They are a Community Development Financial Institution and an SBA lender. Get lines of credit or small business loans ranging from $1,000 to $350,000.
Enchantment Land Certified Development Company
ELCDC is nonprofit that offers loans to small businesses throughout New Mexico (and El Paso, Texas.)
Four Corners Community Bank
FCCB, located in Farmington and Aztec, offers business lines of credit and business and agricultural loans for commercial real estate, agricultural production needs, livestock, and crop production. They also offer loans guaranteed by the USDA Farm Service Agency and the SBA.
Homewise
Homewise is a nonprofit that provides business real estate loans for up to $375,000 (in Santa Fe and Albuquerque.)
LiftFund
Lift Fund is a nonprofit that has provided responsible capital and business education to small business owners and aspiring entrepreneurs since 1994. LiftFund offers SBA 7(a) Community Advantage loans, SBA Microloans, and SBA 504 loans.
The Loan Fund
The Loan Fund is a tax-exempt Community Development Financial Institution (CDFI). They lend to small businesses, start ups, and nonprofits. They offer business lines of credit, business loans (for operations, inventory, expansion, building renovations, microloans (under $50,000), SBA 504 loans for equipment and buildings), In addition to offering loans to businesses and nonprofits, they provide one-on-one business development consultations, financial literacy training, capacity-building technical assistance, and more.
Native Community Capital
Native Community Capital is a Native CDFI, certified by the U.S. Department of Treasury. NCC is a private, non-profit corporation helping to meet the housing, community- and economic development as well as small-business financing needs of American Indian communities primarily but not exclusively in the Southwest. Click here to learn about their Small Business Loans.
Native Women Lead
Native Women Lead have two loan opportunities. You need to sign up for their newsletter to be notified when each cycle starts.
The Matriarch Restorative Fund gives loans of $10,0000 - $50,000 to Native women entrepreneurs who are ready to grow/expand their business. The Matriarch Creative Fund gives loans of $5,000 - $10,000 to Native women artists, makers, crafters, creatives, and revolutionaries.
Nav .com
Nav.com has several funding resources such as Bank loans, Business Loans if you have bad credit, Business lines of credit, and more.
New Mexico Bank & Trust
NMB&T is a division of Heartland Financial, which Forbes named one of the best banks in 2023. NMB&T is an SBA lender, issuing SBA 7(a) Loans, SBA 504 Loans, and SBA Express Loans.
New Mexico Economic Development Department
EDD has several programs to increase access to capital and support economic resiliency.
Provided by EDD and the USDA, the Rural Efficient Business Program provides funding for rural and agriculture businesses to reduce energy consumption, increase profits, and explore ways to implement renewable energy systems.
NM Collateral Assistance Program provides cash to cover collateral shortfalls.
Projects funded through FUNDIT include development projects and planning efforts that focus on revitalizing, preserving, or protecting public areas.
The State Small Business Credit Initiative is a funding opportunity rooted in equity. It gives small businesses access to the capital needed to invest in job-creating opportunities as the country emerges from the pandemic. The funds will also support recipient jurisdictions in promoting American entrepreneurship and democratizing access to startup capital across the country, including in underserved communities.
New Mexico Finance Authority
NMFA was created by the New Mexico Legislature in 1992 to finance infrastructure projects. They have a mission-driven philosophy, low-interest rates, and no loan fees.
Opportunity Enterprise Fund - a loan program that provides financing for building or renovation projects to increase the inventory of commercial space that will attract businesses to New Mexico, allow existing businesses to expand their operations, and achieve economic benefits for the state.
Smart Money Business Loan Participation Program - provides greater access to capital for businesses throughout rural and underserved areas of New Mexico by allowing NMFA to purchase up to 49% of loans originated, underwritten and serviced by local banks at low, fixed interest rates. Funding is for working capital, equipment, and building projects.
New Markets Tax Credit Program - a federal program designed to provide businesses in rural or low-income communities with greater access to capital in order to increase job creation and development activities.
Cannabis Microbusiness Program - no longer accepting applications
North Central New Mexico Economic Development District
NCNMEDD Revolving Loan Fund provides $15,000 - $100,000 that must be leveraged, so are best for projects that will cost between $100,000 and $1 million.
NCNMEDD Working Now Revolving Loan Fund helps small businesses affected by the pandemic with expenses like payroll, rent, inventory, marketing, e-commerce development, personal protective equipment and small capital improvements. They'll provide technical assistance throughout the life of the loan.
Nusenda Foundation Co-Op Capital
The Co-Op Capital program does not require credit, collateral, or status; and shifts the decision-making authority to community organizations, nonprofits, and institutions based on character, goals, and determination – so entrepreneurs can build businesses that succeed.
Rural Community Assistance Corporation
RCAC’s Small Business Loan Program helps businesses create jobs and improve the economic condition of rural communities. The business must be located in a rural community defined as having a population of 50,000 or less .
US Bank
US Bank offers business lines of credit and credit cards, a U.S. Bank Quick Loan, commercial real estate loans, and equipment financing loans. They are also an SBA preferred lender, offering SBA 7(a) business loans, SBA 7(a) real estate loans, and SBA 504 real estate loans.
The US Bank Diversity Lending program provides loans to businesses owned by minorities, women, and veterans.
U.S. Department of Agriculture
The USDA has many loan opportunities for small business farmers through the Farm Service Agency, such as loans for beginning farmers, farm ownership, operations, emergencies, minority and women farmers, Native American farmers, and guaranteed (government secured) loans. Use the FSA Loan Assistance Tool to check your eligibility for FSA Loans, discover FSA loan types, learn about FSA Loan requirements, and walk through the easy-to-understand instructions when completing the forms.
The Rural Development Division offers loans through the Local and Regional Food System Initiative and through a loan guarantee program for rural business development. Funds can be used for land purchase, equipment, debt, job creation, and more.
Western Commerce Bank
WBC opened in Loving in 1961 and now has 11 branches in Loving, Lovington, Carslbad, Hobbs, Tatum, and Albuquerque. In addition to business loans and business lines of credit, they offer:
SBA guaranteed loans
USDA Rural Business Cooperative Service guaranteed loans
USDA Farm Service Agency guaranteed loans
Property development loans
Women's Economic Self Sufficiency Team (WESST)
WESST is one of three SBA micro-lenders in New Mexico that provide loans to small business owners who might not qualify for traditional bank loans. They offer both start-up loans for new businesses and loans to existing businesses.
TOOLS TO CONTINUE YOUR SEARCH
Find a CDFI
Opportunity Finance Network provides a free tool to search for Community Development Financial Institutions (CDFIs). These are lenders with a mission to provide fair, responsible financing to rural, urban, Native, and other communities that mainstream finance doesn’t traditionally reach. You can narrow your search by lender organization type (bank, credit union, etc), state served, and lending type.
Find an SBA Lender
Answer a few questions at the SBA site and they can direct you to the SBA loan that is right for you and connec yu with lenders.
I also found this slightly-out-of-date (2021) list of SBA lenders who fund New Mexico businesses. It's organized by city.
Business & Community Resource Directory at EDD
Use the New Mexico Economic Development Department's directory to find lenders.
Micro-financing is meant to boost the financial self-sufficiency of people who may lack access to traditional banking, such as people who are from an economically disadvantaged population, people from marginalized communities, and people who are geographically isolated.
CDC Small Business Finance
CDC Small Business finance is a nonprofit that helps people get loans when others deny them.
Change Labs Kinship Lending
Change Labs provides business development support to Native-owned businesses. They offer the grant program, Kinship Lending, for Navajo and Hopi business owners, artisans, and entrepreneurs working to build a healthy financial foundation.
DreamSpring
DreamSpring (formerly called Accion) is a micro-lender headquartered in Albuquerque serving Arizona, Colorado, Nevada, New Mexico, and Texas. Their core values are passion, pioneering spirit, integrity, excellence, and accountability.
Grameen America
Grameen America Supports entrepreneurial women who live in poverty to build businesses to enable financial mobility
Justine Peterson
Justine Peterson serves existing and start-up businesses and offers safe and affordable capital with the goal of graduating businesses or individuals back to mainstream finance. Justine PETERSEN offers loans from $500-$150,000.
Kiva
Kiva offers entrepreneurs in the U.S. 0% interest loans up to $15,000. Entrepreneurs must crowdfund their loans from the philanthropic individuals who lend on Kiva’s platform. Kiva has over one million donors and boasts a 94% success rate. To qualify, you will need to invite friends and other contacts for initial funding. Kiva reports payment history to Experian Business.
Lift Fund
Lift Fund is a nonprofit agency that provides small business loans to those who do not have access to capital from typical lenders. They also provide business and financial training for entrepreneurs.
2004 Guide to Funding Small Businesses in New Mexico
PLEASE SHARE AND CREDIT.
I'm not promoting, recommending, or advocating for any of these institutions (except for Prospera Partners and Score, because I have personally experienced how awesome they are, and myself, because I'm awesome, too.)
The organizations, their services, and their websites are are shared so you have the tools and information you need to make the best financial decision for you and your business.
This list is only useful if the people that need it see it. There's enough funding out there for all of us to succeed, so please share among your networks.
If you know about a funding opportunity that's not listed, please send me a message.
