A major New Mexico small-business relief program is set to expire at the end of the year.
But under a new proposal, it would last a lot longer than that.
If reelected next month, Sen. Jacob Candelaria says he intends to propose a bill in January that would extend the state’s Small Business Recovery Loan Fund into next year. The legislation also would propose to direct the program’s unused money toward a new permanent revolving loan fund that would encourage small-business development.
“It would be pretty shameful if the Legislature turned its back on New Mexico businesses today,” Candelaria, D-Albuquerque, said Tuesday.
Legislators passed a bill in June’s special session to create the $400 million loan program intended to offer low-interest loans to help companies and nonprofits withstand the COVID-19 public health restrictions that shut down or restricted business.
Gov. Michelle Lujan Grisham called the program “a significant step” toward helping businesses recover when she signed legislation creating the program over the summer.
But under that bill, the program is scheduled to end in less than three months, even though only around $20 million of the total has been allocated.
“We know in the medium term this program needs to continue,” said Candelaria, who sponsored the original bill along with four other legislators.
Yet the senator wants to go further. He noted other states have funds permanently available that loan money to help attract and strengthen small businesses.
“We don’t have something similar,” said Candelaria, chairman of the Legislature’s Finance Authority Oversight Committee. “This fund deserves that role.”
The proposal would put as much as $500 million in the fund, he said.
The loan program has been criticized of late for attracting relatively few businesses given its overall size, as well as for denying a large percentage of applicants due to strict requirements.
Since the application process opened Aug. 5, only $20.7 million in loans has been approved, which is around 5 percent of the $400 million set aside for the program through Dec. 31, the New Mexico Finance Authority, which administers the program, said Tuesday.
The New Mexican reported last week that 40 percent of the small businesses to apply for loans under the program had been rejected.
Most of the declined applications were turned down due to a requirement included in the legislation that some business owners and advocates find overly prohibitive.
Businesses need to show their revenue fell more than 30 percent in April and May of this year compared with those months in 2019. Many companies can’t do that, though they’ve still faced heavy losses caused by the pandemic, business owners and advocates say.
Candelaria pushed back on that criticism and said the revenue requirements were the result of a compromise with “fiscally conservative” legislators who wanted to impose those rules.
“These implications about the program that it missed its mark are in bad faith,” he said.
Rob Black, CEO of the New Mexico Association of Commerce and Industry, said he would like to know more about Candelaria’s proposal and would favor an effort to make the requirements less strict.
He added he also would like a broader discussion about how to use New Mexico’s existing permanent funds to support small businesses.
“We should be looking at ways we can invest in small businesses,” Black said. “It sounds like that’s what Sen. Candelaria is talking about.”
Lujan Grisham’s office said Tuesday it would consider reexamining the small-business loan fund in the upcoming legislative session, which begins in January.
“Small businesses need all the help we can provide them,” said spokeswoman Nora Meyers Sackett. “We are certainly open to revisiting the issue and working with legislators should the Legislature choose to extend or reevaluate the program.”