The Small Business Investment Corp (SBIC) was created by state legislation in 2000 to provide equity or loan capital to small businesses in New Mexico. Support for this legislation rested on the knowledge that small businesses – those with 25 or fewer employees – are the backbone of the state, sustaining the economies of local communities where they are located.   Most new jobs in the state have been generated by small businesses, and small firms represent the majority of business enterprises in New Mexico.

While it may be a cliché, investing on Main Street instead of Wall Street has paid big dividends in New Mexico, where existing businesses have been strengthened and new businesses have sprouted as a result. Improvements in the economy are visible from Clovis to Farmington and many towns in between, where jobs, employees and communities have flourished.

The challenge recognized by New Mexico’s leaders was attracting new capital to businesses in small communities. Delivering capital to start-up firms was a similar priority, but difficulties arose around how to do it in a timely, cost-effective manner. The SBIC was created to address these challenges and to focus on making equity investments and business loans to New Mexico small businesses.

Most banks use a type of credit scoring matrix to determine if a loan will be made. Small businesses, particularly those just starting out, often have trouble qualifying for loans based on this type of scoring. In addition, small loans of $5,000 or more – those typically needed by small firms – are not very appealing to traditional lenders.

Partnerships have been created with nonprofit lenders that specialize in loans to small businesses. The New Mexico SBIC does not loan directly to businesses, however, these partnerships have resulted in small businesses obtaining the loans they need to start and grow.

To better prepare business owners to apply for these funds, the SBIC has expanded its partnership arrangement to include organizations that provide knowledge resources. Together, we have created a website (www.FinanceNewMexico.org) to assist business owners in finding the information they need to grow or create a business, as well as securing the funds that will help them do it.

Knowing where to look for capital, being prepared before you try to source capital, and knowing the criteria of each organization are all essential to the success of getting a loan.

This article was published in community newspapers and written by Paul F. Goblet, the initial investment advisor, to the NMSBIC.