SB 109 CATASTROPHIC BUSINESS RELIEF ACT

Sen Carrie Hamblen

Actions: [1] SCC/STBTC/SFC-SCC

Scheduled: Not Scheduled

 Senate Bill 109 (SB 109) enacts the Catastrophic Business Relief Act and creates the Catastrophic Business Relief Loan Fund. SB 109 provides catastrophic business relief loans for certain businesses and establishes terms for loans and repayment. SB 109 establishes reporting requirements. SB22611 makes an appropriation. 

 Senate Bill 109 (SB 109) enacts the Catastrophic Business Relief Act (ACT) and creates the Catastrophic Business Relief Fund (Fund) as follows:

SECTION 1 creates the Act. 

SECTION 2 provides definitions as used in the Act. 

SECTION 3 creates the Fund. 
The Fund is created as a nonreverting fund in the authority consisting of standard financial inputs. The authority shall administer the fund, and money in the fund is appropriated to the authority to administer the provisions of the Act. 

B. The state investment officer, subject to the approval of the state investment council, shall invest money in the Fund: (1) in accordance with the prudent investor rule set forth in the Uniform Prudent Investor Act; and (2) in consultation with the state treasurer. 

C. The state investment officer shall report quarterly to the Legislative Finance Committee and the State Investment Council. Annually, a report shall be submitted no later than November 1 of each year to the committees specified in this subsection.

SECTION 4 sets loans and terms as follows:
The authority shall:
- receive and review applications for Catastrophic Business Relief Loans (Loans) pursuant to the Act. 
review all completed applications as specified in this subsection. 
make loans to qualifying businesses as specified in this subsection.
adopt rules to govern the application procedures and requirements for disbursing loans under the Act.

B. The authority shall evaluate the creditworthiness of an applicant based on information received from the applicant, which may include an independent credit reporting agency report when available. 

C. The authority may use funding made available for the purposes of the Act to contract with a loan servicer to assist in carrying out the provisions of the Act as specified in this subsection.

D. The authority shall make Loans in accordance with the following:
(1) the loan amount shall be in an amount up to 200 percent of the qualifying business's average adjusted monthly business expenses from the previous calendar or fiscal year; provided that the maximum loan amount shall be no greater than $25,000; 
(2) prudent lending practices shall be followed; and 
(3) the terms of the loan shall require that the loan recipient use the funds and provide information and reports as specified in this section.
E. The authority may exercise any power provided to the authority in the New Mexico Finance Authority Act to assist in the administration of this; provided that the power is consistent with the provisions of the Act. 

SECTION 5 addresses loan repayment as follows:
A. Loans shall be made for an initial loan period of three years at an annual interest rate of one percent.

B. Payment of the interest accrued on a catastrophic business relief loan shall be due in annual installments, with the first interest and each subsequent payment due on the first anniversary of the funding date of the loan, until the loan is paid in full. 

Payment on the outstanding principal of the Loan may be made on the third anniversary of the funding date of the loan. Or the outstanding principal and interest on the loan may be converted to a loan, at the request of the borrower and with the consent of the authority, to be paid in monthly installments over a period of three additional years. 

C. Receipts from the repayment of principal or interest accrued on the loans made pursuant to the Act shall be deposited in the Fund. 

D. No provision in a Loan shall include a penalty or premium for prepayment of the balance of the indebtedness. 

SECTION 6 service providers shall provide small business technical assistance, as follows:
A. A qualified business with an annual gross revenue of $500,000 or less that receives a Loan and that is receiving technical assistance from a service provider is eligible to receive additional funding in the amount of one-half percent of the loan amount to pay the service provider for technical assistance during the term of the loan or until the service provider certifies to the authority that the qualified business no longer needs the assistance. The authority shall use funding made available pursuant to the Act to provide the service provider with the additional amount, required to be repaid by the qualified business. 

B. Nothing in this section shall be construed to require a qualified business with an annual gross revenue of $500,000 or less to contract with or use the services of a service provider to meet the qualifications of a Loan. 

SECTION 7 requires a report and provides confidentiality, as follows:
A. Prior to October 1, 2024 and each October 1 for the proceeding four years, the authority shall submit a report to the legislature and committees specified in this subsection. The report shall provide details regarding the loans made pursuant to the Act and shall include the information specified in this subsection.

B. Information obtained by the authority regarding individual loan applicants is confidential and not subject to inspection pursuant to the Inspection of Public Records Act. Nothing in this section shall prevent the authority from disclosing broad demographic information and information relating to the total amount of loans made and the total outstanding balance of loans made pursuant to the Act. 

SECTION 8. makes appropriations as follows:
A. $25,000,000 from the General Fund to the Fund for expenditure in Fiscal Year 2025 and subsequent fiscal years for the purposes of the Act. Any unexpended or unencumbered balance remaining at the end of a fiscal year shall not revert to the General Fund. 

B. $250,000 from the General Fund to the New Mexico finance authority for expenditure in Fiscal Year 2025 and subsequent fiscal years to: 
(1) administer the provisions of the Catastrophic Business Relief Act; and 
(2) partner with business-serving organizations, as specified in this subsection, to conduct a statewide public outreach campaign to notify businesses in every community of the loans available through the Act. 

SECTION 9 makes the effective date of this act is July 1, 2024.