- Dec 3, 2020
- 15 min read

~150 Funding Opportunities for New Mexico Small Businesses

updated 1/13/21

Funding options for small businesses in New Mexico -

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, 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 and it is an even more pressing issue in 2020. So, my first post with resources to support small businesses in New Mexico is all about the money.

Note: I'm not promoting any particular service or institution. YOU need to put in the time to find the best option for you.

Ways to Get Funded

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 business.)

The primary sources of funding for start ups comes 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.)

Deer Heart Consulting small business and entrepreneur support with vision, strategic planning, and business plans

Let's envision and get your plan in motion! For FREE!

Loans

Banks don't try to tell you how to run your business, they don't take any of the profit, they don't own any part of the business, and they are easier to access than investors.

But banks, primarily fund wealthier white men. Minorities - women and people of color - are half as likely to start a business with the support of a bank loan.

They also make it extremely difficult to get a loan, especially if you have a credit score below 700, if you have low cash flow, if you lack collateral, or if it's your first business or a business that is just starting up. It's quite shocking that banks are so narrow-minded about this, considering the impact small businesses have on the economy.

If you have good credit, some collateral, and a business plan, it may be a good option for you. Just make sure to learn all the terminology and read the small print before signing.

FYI: Credit Unions tend to approve more loan requests than big banks. And, there are many nonprofits that provide loans.

Business Line of Credit / Inventory Financing

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 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.

Micro-Finance

These are financial services targeting entrepreneurs, individuals, and small businesses who lack access 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.

Microfinance services are designed to help people from poor population segments, the marginalized, and those who are geographically isolated become financially self-sufficient.

Peer to Peer Lending

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. Peer to Peer lending was 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.

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

Roll Over Business Start Ups (ROBS)

There are three ways you can use your 401(k) to fund your new business:

cash out funds
borrow against them
use a rollover for business startups.

The only option that does not result in interest charges, taxes, or penalties is a rollover for business startup. ROBS allows you to start a business or purchase a business with your retirement savings without paying early withdrawal fees or tax penalties. These transactions are not easy, so you should find a ROBS provider with experience. A few are listed below.

Investors

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 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 looks like an 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.

Grants

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.

So, now that you have an idea of what options there are, I'm sure you want to know where to find these sources. This list of resources includes funders specific to northern New Mexico as well as national sources. Before you even start looking, though, you need a solid business plan and budgets. I can help you with that, so send me a message.

The lists include some funding opportunities that are restricted to minority business owners, women business owners, Native American business owners, and artists/musicians. The grants that are COVID-19/pandemic relief grants are grouped together and come after the general Grants section.

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

DEER HEART CONSULTING

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That's me. I provide hands-on, one-on-one support to small business owners, helping strengthen their business fundamentals from vision to strategy to systems to marketing. I have experience in grant writing and government contracts, if that is a route you think your business will take.

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