New Mexico Small Business Loans

New Mexico is located in the Southwestern region of the United States. The state’s economy is mainly dependent on oil and gas industry. As a result, companies are always is need for labour. To add, New Mexico is the eight largest energy supplier in the country. According to study in 2018, the state’s gross domestic product was $101 billion and a GDP per capita of $45,465. The government has designed technical assistance to encourage job growth and business investment, mainly in latest technologies. Besides oil and gas, New Mexico is reliant on small business owners. The state is home to about 155,000 small businesses which covers about 99 percent of all New Mexico-based businesses. New Mexico small business loans assists the businesses in the state to get through difficult times.

How can I get a small business loan in New Mexico?

With the state having such a major portion of the market run by small businesses, different types of lending options become crucial. 

Conventional bank loans are definitely the most looked for when a business needs financial assistance as they offer the best rates out of all. These loans are offered by both large and small banks in New Mexico. The company will be given a period of time to repay the commercial loan which will be specified in termed agreements. The repayment period may vary from months to even ten years depending on the amount. Moreover, rates for traditional loans vary from lenders to lenders starting from 5.25 to 20 percent. The company should research and find the best possible lender. They are mostly utilized by New Mexico small businesses to take hold of other businesses, purchase commercial real estate, refinance a business mortgage, help with expansion financing of other businesses, and offer small businesses working capital. 

Small Business Administration (SBA) lending program is specially designed for small businesses to help owners take a firm hold of their business. These are long term loans and are controlled by the government. SBA loans are specifically designed for small businesses as they provide better security. This means, in case an New Mexico small business defaults, SBA loan reduces the lender’s exposure to losses as the government helps to cover up for most of their losses. However, being backed by the government, the process requires a lot of paperwork. The company will need to show strong health, a good borrowing history, good credit and demonstrate a profitable business plan and show their ability to repay the loan. SBA 7(a) loan is the most common out of many. Loan amount can get as high as $5,000,000 with rates varying from 5.25 to 7.75 percent. Lenders offer flexible terms and the process takes about a month.

Asset Based Loans (ABL) mostly depends on the collateral of your business, rather than just cashflow and credit. Asset based loans help the New Mexico small businesses to legalize their assets on the company’s balance sheet. Assets such as buildings, land and other commercial property, along with account receivable, inventory and equipment and machinery can be legalized and utilized for an asset-based loan. ABL is a great choice for companies with a stable growth. Companies which are struggling to recapitalize their balance sheet can also choose ABL. ABL allows high amounts in term of loan with flexible terms and rates starting from 5.25 percent. This is a very fast process which can take only 10 days.

Invoice Factoring is a business-to-business transaction that allows a company the potential to leverage unpaid 30, 60 and 90 day invoices to gain specialized short-term business financing before the customer actually pays the invoice. New Mexico small businesses receives much needed working capital to help with cash-flow at a feasible rate.

Purchase order financing is for that business which is suffering from shortage of working capital to fulfil purchase orders. The financers will provide the company sufficient capital required to pay suppliers and vendors. New Mexico small businesses with raw materials won’t qualify for this loan. They need to have finished products instead. PO financing offers revolving credit with rates ranging from 1.5 to 3.5 percent. 

Challenges faced by small businesses in New Mexico

New Mexico is comparatively a poor state with about half of its economy based on its service sector. The state even has the lowest per capita income in the country. The state’s unemployment rates are disappointing. Due to low wages, many labours are shifting to other states. This has led to a lack of workforce. The ratio of state debts, taxes and revenues to personal income is poor and the state revenues are falling short of expenses. The state has a relatively high tax index. Sudden shutdown of a New Mexico small business can occur due to lack of access to capital, and unreasonable policies.

Unsecured Business loans in New Mexico

Business line of credit is a kind of small business loan that offers flexibility which usual loans does not offer. This type of loan is best to compensate for expenses that tend to fluctuate throughout the course of the year. Banks in New Mexico offer revolving terms with rates starting from 5.75 percent.

New or used business equipment can also be financed in many ways through equipment financing. While some Iowa small businesses will find it easiest and most affordable to obtain a term loan or other type of lending facility to purchase business equipment, other small business owners may find that the best way to obtain the equipment is to lease rather than buy. This is because leasing reduces the amount of cash that would be required instead of leasing equipment. By leasing, the company won’t be forced to pay the full-price for the equipment upfront. Moreover, they will enjoy the latest equipment beforehand. Rates may vary from 5.25 to 25 percent with terms from 1 to 5 years.

Term loan is another form of loan which is paid in instalments over a set period of time. Term loans can also be used as acquisitions, and consolidations and refinancing business debt. This type of loan offers varying rates.

Documents required to get a small business loan in New Mexico

– 1-page application
– 3 months of bank statements

Being a relatively poor state, New Mexico relies hugely on small businesses. Thus, there are a number of lending options for new businesses to stay afloat during their tough times. It is important for the company to figure out which loan they should go for.