Small business loans good use of tax dollars
In this political high season, if you ask the average New Mexico voter or politician what the state’s economy needs, jobs, as well as support for existing small businesses, will be high on all the short lists.
But ask them for specifics on how to achieve either, and you’ll be lucky to get much beyond growing government and entitlement programs or mandating higher paychecks.
Yet New Mexico has quietly been making investments that allow entrepreneurs whose enterprises are small, but whose drive and vision aren’t, to hire their fellow New Mexicans.
Since its creation by the Legislature in 2001, the New Mexico Small Business Investment Corp. has used the equivalent of 1 percent of the severance tax fund, or about $47 million, to invest in New Mexico businesses.
Under the Gov. Bill Richardson administration, the focus was on funding venture capitalists, many of whom went bust in 2008’s Great Recession.
Under the administration of Gov. Susana Martinez, who replaced most of the NMSBIC’s seven-member board of directors, the focus has been on providing low-cost revolving lines of credit to three New Mexico microlenders, which in turn provide loans to entrepreneurs and small businesses that otherwise wouldn’t qualify for commercial credit.
And those investments have paid off in more ways than one — The Loan Fund has a 97.5 percent repayment rate among borrowers; Accion has a 94 percent repayment rate. Along with WESST, which focuses more on mentorship, the microlenders operate throughout the state, unlike venture-backed startups that tend to concentrate in urban areas.
Accion President and CEO Anne Haines explains “the state is getting a very real return on its funding in terms of jobs sustained and created. NMSBIC dollars have reached into the hands of low- and moderate-income families throughout the state to expand or launch new businesses.”
And they provide not only jobs to New Mexicans, but vital services as well.
The Legislature established the NMSBIC with a goal of job creation. More than a decade later, it is providing tangible results in the form of jobs and services for New Mexicans. And, especially in a political season, it’s good to have a concrete example of how to put tax dollars to real work.
— Albuquerque Journal