Small business owners are an important part of the economy in the state of New Mexico. Did you know that small businesses employ more than half of the private workforce in the state?
But employing all those people costs money. If your small business needs a little assistance to get the capital you need to operate, keep reading.
How a Small Business Loan Can Help Your New Mexico Business
Small business loans can be helpful for hiring employees, but that’s just the tip of the iceberg. You can use loan funds to invest in marketing, purchase inventory, obtain equipment, or even acquire another business.
If you’re in a slow period, financing can get you through until things pick up. You can take out a loan to purchase commercial real estate or a company car.
Types of Small Business Loans to Choose From
Small business loans come in a variety of shapes and sizes, and there are dozens of different lenders in each category. Explore a few of your loan options in New Mexico.
SBA Loans
The U.S. Small Business Administration backs small business loans with low interest rates. These loans can be used for working capital, to purchase real estate, or to cover operating expenses. Generally, you need to be in operation for at least two years and have decent credit to qualify.
Bank Loans
Another option for low-interest loans is a term loan from a bank or credit union. These typically are only open to borrowers with good to excellent credit.
Lines of Credit
Another option from banks and credit unions (as well as some online lenders) is a line of credit. Whereas with a loan you get all the cash up front and then start paying back the balance, with a line of credit, you have access to a certain amount of money and don’t have to borrow it all. Take what you need and then pay that back. If you need more later, you can borrow more.
Merchant Cash Advance
For those who don’t have the good credit it takes to qualify for the options above, a merchant cash advance is worth looking into. It’s not actually a loan but rather an advance on future sales. This option may have higher interest or fees.
Small Business Loan Options for New Mexico
Now let’s look at some of the lenders you can work with to get financing like what we’ve discussed.
SBA Loans in New Mexico
Bank Loans in New Mexico
- Credibly
- United Business Bank
- Newtek
Lines of Credit in New Mexico
- WaFd Bank
- OnDeck
Merchant Cash Advances in New Mexico
- Rapid Finance
What it Takes to Get Approved for a Small Business Loan
The qualifications you’ll need to get a small business loan will depend on the type of loan you’re applying for and how much you want to borrow.
Typically, lenders look at your credit scores. To qualify for a bank or SBA loan, you’ll need good to excellent credit. If you don’t have it, alternative lenders who offer short-term loans or merchant cash advances may look at other criteria, such as revenues.
For bank and SBA loans, you’ll need to be in operations for at least two years. Startups may have difficulty getting approved.
If you find you aren’t qualified for the type of financing you want, consider building your business and personal credit so you have more options.
How to Choose the Right Loan for Your New Mexico Small Business
Finding the right loan program is of the utmost importance when you’re a small business. Consider what you want to use the money for. Ideally, that investment would help you make more money so you could easily pay back the loan.
Next, look at what you qualify for. The lower the rate you pay, the lower the cost of financing.
It’s important that you budget in your monthly loan payment, since borrowing too much could cause you to not be able to afford to pay it back, and then you risk defaulting on the loan.
Small Business Grant Options for New Mexico
In addition to small business loans in New Mexico, there are also grants offered by nonprofit organizations and local governments that eligible businesses may qualify for.
All Together NM Fund Small Business Grants
Businesses with five fewer employees may be eligible for grants of up to $5,000 through the All Together NM Fund.
Nav’s Small Business Grant
Every quarter, one business receives $10,000 and runners up $5,000 in Nav’s Small Business Grant.
Amber Grant for Women
Every month, one female-run business receives $10,000 to help grow its company with the Amber Grant, and every year, there is a $25,000 winner.
Additional Resources for New Mexico Small Businesses
Looking for business resources to help you grow as an entrepreneur? There are plenty of technical assistance programs and economic development resources in New Mexico that provide training, workshops, and networking opportunities.
Small Business Development Center
The New Mexico SBDC offers a wealth of resources, including education on getting government contracts, international trade, and environmental regulations.
Finance New Mexico
Finance New Mexico offers workshops on a variety of topics, including social media, marketing, and finance.
SCORE
At SCORE, you can get free mentoring, find help developing your business plan, and attend free workshops and training to grow your business.
From Albuquerque to Santa Fe, New Mexicans who are entrepreneurs have so many resources to help them start, manage, and grow their businesses. It’s all just a matter of choosing what’s right for your business.
This article was originally written on February 4, 2022.
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