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 Loan Participation Program will provide credit support through the purchase of a portion of a loan made by a lender or through a separate subordinate loan made alongside a private lender.
The Capital Access Program will provide portfolio insurance in the form of a loan loss reserve fund, into which the lender and borrower contribute.
Are you a business owner in need of extra support to help your business thrive? The New Mexico SSBCI Technical Assistance program may be able to help. Visit NM SSBCI Technical Assistance for information about no-cost financial advisory, legal advisory, and accounting assistance and workshops available to New Mexico’s businesses.
Applications for Lenders
Information
What is SSBCI?
The State Small Business Credit Initiative is a federal program that 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.
Read more about the SSBCI program on the U.S. Department of the Treasury website.
Loan Participation Program - Benefits
The SSBCI LPP provides credit support through the purchase of a portion of a loan made by a lender or through a separate subordinate loan made alongside a private lender. The subordinate loan can reduce the bank’s LTV and the borrower’s down payment requirement (similar to an SBA 504). These can lower the borrower’s debt service requirement.
Benefits to Lenders:
– Reduces risk
– Allows lenders to offer more competitive terms
– No fees
– Can reduce a borrower’s debt service requirement
– Will help lenders 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