State Small Business Credit Initiative (SSBCI)
State Small Business Credit Initiative
In partnership with the NM Economic Development Department, NMFA has implemented two federally funded programs to assist small businesses throughout New Mexico, particularly those in underserved and rural communities.
The SSBCI programs administered by NMFA consist of a Loan Participation Program and a Capital Access Program. Both programs are designed to increase access to capital for small businesses in New Mexico by reducing risk for lenders.
The Capital Access Program will provide portfolio insurance in the form of a loan loss reserve fund, into which the lender and borrower contribute.
The Loan Participation Program will provide credit support through the purchase of a portion of a loan made by a lender or through a direct loan alongside a private lender.
Applications for Lenders
Information
What is SSBCI?
The American Rescue Plan Act (ARPA) reauthorized and funded the State Small Business Credit Initiative (SSBCI). The new version of the program provides a combined $10 billion to states, the District of Columbia, territories, and Tribal governments to empower small businesses to access capital needed to invest in job-creating opportunities as the country emerges from the pandemic.
Read more about the SSBCI program on the U.S. Department of the Treasury website.
Loan Participation Program - Benefits
Benefits to Lenders
– Reduces risk
– Allows lenders to offer more competitive terms
– No fees
– Allows lenders to approve loans that might otherwise be declined
Loan Participation Program - Eligibility
Businesses apply to the Loan Participation Program through a financial institution.
Eligible businesses include for-profit and nonprofit businesses in New Mexico.
Loan Participation Program - Loan Terms
Loans may be for lines of credit or term loans
Loans may be used for business startup or expansion, including facility purchase, construction, or renovation; working capital, equipment, inventory, technology, and other uses.
Loan amounts may be between $50,000 and $7,500,000
Loan terms depend on what the funds are used for and range from up to 36 months for working capital to up to 25 years for real estate.
Capital Access Program - Benefits
Benefits to Lenders
– Reduces risk of loss
– Allows lenders to approve loans that might otherwise be declined
– If a lender has a loss, the loss amount would be covered by the reserve pool
Capital Access Program - Eligibility
Financial institutions that are lending to small businesses in New Mexico are eligible to apply to participate in the program. Financial institutions may include banks, credit unions, and CDFIs.
Businesses with fewer than 100 employees are eligible to apply to the Capital Access Program through a lending institution. Other business eligibility requirements are found in the Capital Access Policy.
Capital Access Program - How does it work?
Once approved, a participating financial institution (PFI) enters into a lender agreement with NMFA and establishes a loan loss reserve account capitalized by premium payments. For each enrolled loan, premiums are paid by the borrower and the PFI (up to 7% of the loan amount in total), and matched by SSBCI, making total premium contributions up to 14% of the total loan amount for each enrolled loan. Over time the balance in the loan loss reserve account grows as additional loans are enrolled. The balance of the loan loss reserve account may be used by the PFI to cover losses from the default of any small business loan enrolled in the program.
Capital Access Program - Loan Terms
Loans may be for lines of credit or term loans
Loans may be used for business startup or expansion, including facility purchase, construction, or renovation; working capital, equipment, inventory, technology, and other uses.
Loan amounts may be between $10,000 to $1,500,000
Loan terms are up to ten years
Questions? Contact NMFA Lending by email at business@nmfa.net or call (505) 984-1454