The Collateral Assistance Program (CAP) helps creditworthy small businesses obtain a loan for which they might not otherwise qualify. To help banks and other financial institutions make loans to small businesses in underserved markets, the New Mexico Economic Development Department can pledge cash to cover a collateral shortfall of a loan to enable commercial financing. Business owners apply through a participating bank or financial institution that can initiate the loan. 

The EDD gives preference to business owners who are women, U.S. Veterans, ethnic minorities, or part of other socially disadvantaged groups that often lack access to capital.

To be eligible, borrowers must meet these criteria:

• Business purpose is one of the industries listed in the North American Industry Classification Systems (NAICS) codes list.
• Business is considered a “small business” under the U.S. Small Business Administration.
• Business employs 750 employees or fewer full-time equivalents.
• The business is located in New Mexico.

Loan proceeds can be used toward startup costs, working capital, franchise fees, equipment or inventory purchases, or bridge loans needed prior to obtaining permanent financing or support.

WESST, DreamSpring, The Loan Fund, LiftFund, RCAC, and Century Bank are a few of the lenders that are authorized to participate in the program.

Initially managed by the New Mexico Finance Authority, the CAP program now falls under the New Mexico Economic Development Department and is funded by the American Rescue Plan Act which allocated $10 billion to increase access to equity and debt capital through the State Small Business Credit Initiative (SSBCI) program.

Read more on the New Mexico Economic Development Department’s website.