The Ultimate Guide to Funding Your New Mexico Small Businesses

most recent update 5/27/2023

 

 

Links to Funding Opportunities, by Funding Type

• Resources & Training
• Loans Opportunities
• Micro-Financing Opportunities
• Grant Opportunities
• Scholarship Opportunities
• Roll Over Business Startups (ROBS) Opportunities
• Angel Investors
• Venture Capital Firms

 

 

You've probably heard that 50% of businesses fail within the first 5 years. Being an entrepreneur or owning a small business isn't known for being a sure thing. According to the Small Business Administration, this fact holds true across industries. So, whether your business is in retail, food, travel, or construction - the rate of success is essentially the same, across the board.

 

The SBA also says the four main reasons why small businesses fail are lack of funds, poor management, faulty business model, and ineffective marketing. Failure in any of these areas is ultimately due to lack of strategic planning. And, strategic planning is only as good as the research you do. And research takes time. To help local businesses increase your chance of survival, I will be sharing what I know and doing a lot of research on all of these topics.

 

Lack of money is the thing business owners will readily admit is an issue. It is the number one reason for business failure. It became an even more pressing issue in 2020, and so one of my first posts with resources for small businesses in New Mexico was all about the money.

Note: I'm not promoting any particular service or institution. This is an informational post so you are better equipped to make the best choice for you. Also - none of this is free money. It all requires a lot of time, thought, and effort.

 

 

We made it through the pandemic. Now it's time to think about how to recover and get to a place of thriving (not just surviving.)

First and foremost, know where you are at, financially. You don't need to be independently wealthy to start and run a business. In fact, a relatively large number of businesses need less than $5,000 to get started (and a relatively large number of independently wealthy business owners are terrible at running their businesses.)

Secondly, you should consider all the options for how to how to improve your business' financials. Look at where you can reasonably cut costs without negatively impacting business. Do some systems improvements and get more efficient. Develop some creative strategies for building your network and growing your customer base. And, look at all of the funding options shared below. Don't dismiss a funding option before you look into it just because it didn't work before or because of what you think you know about it. Do some research, get current info, and THEN make a decision.

The primary sources of funding for start-ups come from home equity and personal assets, personal credit cards, and personal savings. But, there ARE other ways to get the money you need for your business. It just requires patience, perseverance, and time. And planning. Never forget the planning. (The majority of funders will want to see your business plan.)

 

 

If you have good credit, some collateral, and a business plan, a bank loan may be a good option for you. Just make sure to learn all the terminology and read the small print before signing. And have a clear plan in place for how you'll pay it back.

SIDE NOTE:

Credit Unions tend to approve more loan requests than big banks. And, there are many nonprofits that provide loans. Bankrate (a financial resource that offers comparison tools, calculators, and other educational tools) shared this great post on assorted funding opportunities for Latino entrepreneurs, including a list of Latino-focused Credit Unions that do not require a Social Security number to get a loan.

 

A business line of credit is like a business loan crossed with a credit card. It is more flexible than a business loan and you only pay interest on what you use. And as long as you don't go over your limit, you can pay it back on your own schedule. To get a business line of credit you need to show that you've put personal investments into your business, you aren't losing money, and you have industry experience. You also need a good credit score and a business plan.

 

If you have a lot of your cash tied up in your inventory, you may be able to get Inventory Financing, which is a line of credit secured by your inventory.

 

 

These are financial services targeting entrepreneurs, individuals, and small businesses who lack access to traditional banking and related services, such as microcredit, loans to economically disadvantaged people, savings and checking accounts, insurance, payment systems, and more.

Micro-finance services are designed to boost the financial self-sufficiency of people from poor population segments, people from marginalized communities, and people who are geographically isolated.

 

 

It sucks that Peer to Peer lending is not included on most lists about small business funding options. It's like a mutual aid system of financial support where you get a loan from another individual or group. P2P is an approachable form of connecting businesses with investors, born from growing technology, mass collaboration, and social trends.

Like banks, you have a better chance at getting financial support if you have good credit. A big difference, though, is P2P platforms will allow you to use your story to convince funders to ignore some dodgy credit history and invest in your business. This is great since credit scores don't actually reflect how good a person is with money management and ignore thigs like debt from abusive relationships or medical bills.

The SBA issued a brief about P2P being a viable alternative for funding. If you want to learn more, this article at Investopedia has a lot of useful information about P2P lending.

 

There are three different ways you can fund your small business using your 401(k) retirement funds.

• You can cash out these funds.
• You can borrow against your 401(k).
• You can use a rollover for business startups.

What is rollover for business startups, you ask? Of the three 401(k) funding options, ROBS are the only option that does not result in interest charges, taxes, or penalties. ROBS allows you to start a business or purchase a business with your retirement savings without paying early withdrawal fees or tax penalties. But, be forewarned: ROBS transactions are not quick or easy. It requires complicated and extensive paperwork. You can't do it on your own. Make sure to speak with a ROBS provider who has experience. A few are listed below.

 

Have friends or family with access to capital? If you are completely confident you and they are able to mix personal with business, pitch the idea to them for a loan. Just make sure your pitch includes a set timeline for payments and interest. And, if you've been in business a while, you may be able to look to customers or suppliers for a loan or investment.

 

Angel Investors will pony up money for a stake in the company. It's not just Shark Tank or the random wealthy person you meet. Unlike venture capitalists, who invest huge money in businesses that are likely to give them an almost immediate return, Angel Investors recognize that profitability takes time for most of us.

If Angel investments look like a path you want to take, be prepared for a long process and check out this Forbes article with 20 tips. If you do find an investor, here's a free template for a promissory note that will lay out the terms of the loan.

 

 

There are a lot of grant opportunities for women, minorities, and veterans. Probably because the banking industry makes it difficult for these groups to get a loan. And there are lots of government grants, usually through the economic development offices of small/local government agencies. But do not approach this like it's free money. Grant applications and reporting on grant funding takes a lot of time and effort and meticulous record-keeping.

 

 

 

If you are currently a student looking to start your own business, there are tons of scholarships out there to support your entrepreneurship and future small business.

So, now that you have an idea of what options there are, I'm sure you want to know where to find them. Below is a list of resources that includes funders specific to northern New Mexico as well as national organizations. Before you even start looking, though, you need a solid business plan and a clean budget. I've helped many businesses create business plans from the ground up which resulted in their securing new funding. I can help you with that, too. Send me a message and we can schedule a free chat.

The lists below include some funding opportunities that are restricted to minority business owners, women business owners, Native American business owners, and artists/musicians.

 

Free or inexpensive resources, trainings, mentors, and consultants that support small businesses in New Mexico.

DEER HEART CONSULTING

website

That's me. I help small businesses with their business plan, including developing a creative strategy, mapping out realistic plans of action, updating systems to improve efficiency, and creating a compelling marketing plan. 

• Their resource page on Access to Capital has helpful worksheets and templates, including Loan Proposal Checklist, Balance Sheet Glossary of Terms, Helpful Financial Ratios, and a Startup Budget Template
• International Business Accelerator (IBA) in Santa Teresa, NM
• Procurement Technical Assistance Center (PTAC) introduces established businesses to contracting with government agencies

• Rural Efficient Business Program provides funding for rural and agriculture businesses to reduce energy consumption, increase profits, and explore ways to implement renewable energy systems.
• NM Collateral Assistance Program provides cash to cover collateral shortfalls
• Through their Business Finance Finder a small business or entrepreneur submits their finance needs and a project description, which is then emailed to a list of funders.

• Small Business Recovery Loan Fund - Open until December 31, 2022. The New Mexico Legislature recently expanded the Small Business Recovery Loan Fund to better help businesses experiencing financial hardship caused by the pandemic. More businesses are now eligible to apply for a loan, the loans have more favorable and flexible terms, and businesses that received a Small Business Recovery Loan in 2020 can refinance for a longer term or a bigger loan.
• Opportunity Enterprise Fund - Currently being developed. This fund will provide financing for projects that advance the economic development goals of the program. These economic goals will be determined by the Opportunity Enterprise Board in collaboration with EDD and may include job creation, provision of needed services and goods to diverse communities across the state, and others.
• Smart Money Business Loan Participation Program - provides greater access to capital for businesses throughout rural and underserved areas of New Mexico by allowing NMFA to purchase up to 49% of loans originated, underwritten and serviced by local banks at low, fixed interest rates. Funding is for working capital, equipment, and building projects.
• New Markets Tax Credit Program - a federal program designed to provide businesses in rural or low-income communities with greater access to capital in order to increase job creation and development activities.
• Cannabis Microbusiness Program - provides affordable loans to licensed cannabis microbusinesses in New Mexico.

• Dedicated $25 million to support small businesses during the pandemic. These are the companies administering those funds.
• Loan Fund is a nonprofit organization that offers business loans and lines of credit up to $500,000 throughout New Mexico.
• DreamSpring a is a nonprofit registered New Mexico small business loan company that increases access to business credit, offers loans, and provides training throughout New Mexico.
• Lift Fund is a nonprofit agency that provides small business loans to those who do not have access to capital from typical lenders. They also provide business and financial training for entrepreneurs.
• Homewise is a nonprofit organization that provides business real estate loans up to $375,000 in Santa Fe and Albuquerque.

• NCNMEDD Revolving Loan Fund provides $15,000 - $100,000 that must be leveraged, so are best for projects that will cost between $100,000 and $1 million.
• NCNMEDD Working Now Revolving Loan Fund helps small businesses affected by the pandemic with expenses like payroll, rent, inventory, marketing, e-commerce development, personal protective equipment and small capital improvements. They'll provide technical assistance throughout the life of the loan.

• Micro-Grant Fund is $500 - $3000 grants to help businesses grow and create jobs
• RDC Team / Manufacturing Fund is a no-interest loan up to $20,000 for technology and manufacturing businesses
• RDC Tribal Economic Diversity Fund gives grants from $1,000 to $8,000 to businesses owned by federally recognized tribes or businesses that have 51% or more ownership by an enrollee. Small window for applications begins in July. 

• Business & Industry Loans
• Intermediary Relending Program provides 1& low-interest loans to local lenders or “intermediaries” that re-lend to businesses to improve economic conditions and create jobs in rural communities. Contact them

CARTIER WOMEN'S INITIATIVE

CITY OF SANTA FE ARTS & CULTURE DEPARTMENT

COMCAST RISE

FEDEX SMALL BUSINESS GRANT

FIRST NATIONS DEVELOPMENT INSTITUTE

link

Grant opportunities for Native American projects and organizations

 

GRANTSFORWOMEN.ORG

IDEA CAFE Small Biz Grant Center

NATIVE AMERICAN BUSINESS DEVELOPMENT INSTITUTE (NABDI)

NAV.COM

NEW MEXICO DEPARTMENT OF CULTURAL AFFAIRS

link

Funds nonprofits and governmental organizations for arts activities in the following discipline areas: performing arts, visual arts, literary arts, media arts, multidisciplinary arts (involving more than one artistic discipline), and interdisciplinary arts (relating two or more artistic disciplines).

 

NEW MEXICO GRANT WATCH

OPERATION HOPE

REGIONAL DEVELOPMENT CORPORATION

• RDC Microgrants is a competitive grant that gives businesses up to $2,500 to help sustain or grow without them having to provide collateral
• RDC Tribal Economic Diversity Fund gives grants from $1,000 to $8,000 to businesses owned by federally recognized tribes or businesses that have 51% or more ownership by an enrollee. Small window for applications begins in July.

SMALL BUSINESS ADMINISTRATION

• Boots 2 Business participants get support for 5 years

US DEPARTMENT OF AGRICULTURE - FARM SERVICE AGENCY

• Microloans
• Farm Ownership Loans
• Guaranteed Farm Loans
• Minority & Women Farmers & Ranchers Loans
• Native American Tribal Loans
• Beginning Farmers & Ranchers Loans
• Emergency Farm Loan

US DEPARTMENT OF COMMERCE - MINORITY BUSINESS DEVELOPMENT AGENCY

• American Indian Alaska Native / Native Hawaiian Projects - supports Tribal and native business growth by addressing one or more of the following three strategic initiatives: a) innovation and entrepreneurship; b) strategic planning; and/or c) transformative projects.
• American Indian Business Enterprise

U.S. GRANTS - NEW MEXICO

 

THIEL FELLOWSHIP

BUSINESS LEADERS OF TOMORROW

FORMSWIFT STARTUP SCHOLARSHIP

 

LEONARD FAMILY ENTREPRENEURIAL SPIRIT SCHOLARSHIP

GUIDANT FINANCIAL

BUSINESS FUNDING TRUST

FRANFUND

BENETRENDS

MY SOLO401K

CREDIBLE

link

FUNDING CIRCLE

LENDING CLUB

LENDING TREE

LENDIO

LOANS UNDER 36

MONEVO

PEERFORM

PROPSER

UPSTART

Some of these Angel Investor groups are located in New Mexico and others fund specific demographic groups of business owners.

37 ANGELS

AMERICA'S SEED FUND by NSF

ANGEL CAPITAL ASSOCIATION

ANGEL INVESTMENT NETWORK

ARCVIEW

FEMALE FOUNDERS FUND

FUNDZ

GOLDEN SEEDS

GUST ANGEL NETWORK

LIFE SCIENCE ANGELS

NEW MEXICO ANGELS

PIPELINE ANGELS

THE PINK CEILING

WOMEN FOUNDERS NETWORK

SMALL BUSINESS ADMINISTRATION - FIND INVESTOR

ABQid

ARCH VENTURE

ARROWHEAD INNOVATION FUND

ASPEN VISTA CAPITAL

BLUESTONE VENTURE CAPITAL

CAMINO REAL CAPITAL PARTNERS

COTTONWOOD TECHNOLOGY FUND

EPIC VENTURES

FLYWHEEL VENTURES

INTERNATIONAL VENTURE FUND

NEW MEXICO COMMUNITY CAPITAL

NEW MEXICO START UP FACTORY

NEW STATE INVESTMENT COUNCIL - DIRECT EQUITY INVESTMENTS

NMA VENTURES

PHOENIX VENTURE PARTNERS

SIGNAL PEAK VENTURES

TRAMWAY VENTURE PARTNERS

VERGE FUND

WESTERN ASSOCIATION OF VENTURE CAPITALISTS