Cannabis Microbusiness Program

The loan amounts are expected to be $50,000-$150,000 with a maximum loan amount of $250,000. The loan amount will be determined in the underwriting process.

Effective, May 9, 2023, the Cannabis Microbusiness Program will no longer accept new applications.

Loan proceeds may be used to fund the purchase of assets or operational costs directly related to cannabis production, including:

• Buildings (including greenhouses)

• Equipment (including lighting, security systems)

• Agricultural inputs (including seeds, soil, fertilizers, insecticides, water/irrigation systems)

• Working capital (including lease and utility payments, labor, transportation, technical assistance, professional certification/development, consulting, marketing)

Reimbursement and Payment Information

A business may use the loan proceeds by paying for its eligible expenses upfront and then getting reimbursed by NMFA.  In this case, NMFA will transfer the reimbursement funds directly into the business’s bank account. This will most likely be the quicker process.

A business may also use the loan proceeds by having NMFA pay its vendors directly for eligible expenses. In this case, U.S. Eagle will send a check to the vendor.

In either case, the business is responsible for collecting any required W-9 forms from its vendors and for sending out any required 1099 forms to its vendors.

Effective, May 9, 2023, the Cannabis Microbusiness Program will no longer accept new applications.

Businesses must be licensed by the New Mexico Cannabis Control Division in order to access the online application system. Applicants will input some of the required information directly into the application and will upload other required documents as attachments. Following is a preview of some of the requirements so businesses can begin to collect their information and documents before starting the application:

•  Copy of license from the New Mexico Cannabis Control Division (CCD)

• Consent for CCD to share applicant information with NMFA

• Copy of business permit (or conditional business permit) from local government where the business is located if required by your local government

• Applicant legal entity type and all entity formation documents, including a certificate of good standing from the New Mexico Secretary of State, if applicable

• Ownership structure of the Applicant (for each owner detailing name, address, percentage ownership)

• Organizational chart

• Resumes for all members of the management team

• Copies of all operating policies, as applicable, including
• Compensation/HR policy
• Social and economic equity plan
• Health and safety policy
• Cyber/information security
• Insurance policies

• Sources and uses of loan proceeds (detailed schedule)

• Business plan and a minimum of three years of pro-forma financial statements. The pro-forma financial statements are your financial projections for the upcoming three years.

• Complete list of outstanding indebtedness, along with terms, to Applicant or to any Controlling Person

• List of assets including current value

• Current balance sheet and P&L statement

• Financial statements for last three years, audited or unaudited, if available

• Authorization to obtain a credit report on all owners, Controlling Persons and guarantors

• Other information as required

Loans will be structured to achieve repayment from operating cash flows without adversely impacting the operations of the business.

How long is the loan term?

The loan term will be a maximum of five years. Loans will be structured with an initial interest-only period of up to two years to allow for operational ramp up and for maximum terms of five years.

What is the interest rate?

Loans of $100,000 or less with terms of three years or less will have a fixed interest rate of 2%.

Loans over $100,000 and loans that have a term of more than three years will have a fixed interest rate of 3%.

Collateral will be required to secure the loan. Cannabis in any form cannot be used as collateral.  A personal guarantee will be required from anyone who owns more than 10% of the business or who has a controlling interest in the business.

All businesses that are approved for a loan from the Cannabis Microbusiness Program must have a checking account with US Eagle Federal Credit Union before the loan closing. If your business already has a checking account with U.S. Eagle, you do not need to open another account. If you don’t have a checking account with US Eagle, information is available at https://www.useagle.org/.

Borrowers will be required to authorize the sharing of bank account information with NMFA. In addition, borrowers are required to submit monthly bank account statements, quarterly financial statements, and a detailed annual reporting package that includes:

• Latest complete financial statements
• Latest inspection/compliance report and licensure renewals from CCD and other relevant regulatory bodies
• Brief narrative on business performance including job creation metrics
• Certification that all representations, warranties and covenants remain true and correct
• Certification that there has been no change in business ownership/change in control
• NMFA reserves the right to request additional information for monitoring purposes.

Effective, May 9, 2023, the Cannabis Microbusiness Program will no longer accept new applications.

Can I prepay the loan?

Yes, loan balances may be prepaid without penalty or premium at any time.

How do I make loan payments?

Borrowers will agree to register and repay their loans through NMFA’s online payment portal.

Is a new or start-up business eligible to apply for this loan?

Yes.