June 01--Alow-cost family health clinic for the uninsured in Albuquerque'sSouth Valley has been flourishing since 2011, thanks in large part to the microlending institution Accion.
Clinica La Esperanza founders Olena Dziuba and Mauro Nava needed operating capital to launch in fall 2011, but no commercial banks would lend them money as a new startup without revenue.
So they approached microlender Accion, which offers loans of up to $300,000 for small businesses and aspiring entrepreneurs who lack access to capital from traditional lenders.
Accion gave them $30,000 to get started, and within one year, the business ballooned to nearly 4,000 patients. Last year, they got another $30,000 from Accion to expand from their original 1,700-square-foot space to a new 5,500-square-foot office where they now serve 6,500 patients.
"We have capacity now to serve up to 16,000 patients," Dziuba said. "Accion was absolutely critical for us to get started and then to grow our clinic. Without them, we may not even be in business."
Like the clinic, thousands of small businesses around the state that would otherwise not qualify for commercial credit have received a combined total of about $97 million in loans in the past 25 years from New Mexico's three micro-lending organizations -- Accion, The Loan Fund and WESST.
That assistance has helped individuals and families start or expand more than 7,000 businesses, creating or supporting about 15,000 jobs statewide.
But most loan beneficiaries probably don't know that their microlending assistance is made possible, in large part, by the New Mexico Small Business Investment Corp., a state program established in 2001 by the Legislature to use severance tax permanent funds for job creation. The NMSBIC manages the equivalent of 1 percent of the severance tax fund, or about $47 million.
Since 2003, when the NMSBIC began investing money in microlenders, its funding has accounted for about $46 million of all the loans made by the three New Mexico organizations.
The NMSBIC provides low-cost revolving lines of credit to the micro-lenders, including $5 million for Accion, $10 million for The Loan Fund and $375,000 for WESST. Those organizations re-loan the money out as businesses pay back their credit.
As a result, about $21 million, or 58 percent of the $36.4 million in loans made to date by Accion, has come from NMSBIC funds. And nearly $25 million, or about 45 percent, of the $55 million awarded to businesses by The Loan Fund has come from the NMSBIC.
The microlenders receive substantial support as well from federal agencies, foundations, charitable groups and individuals.
But without the NMSBIC, their loaning capacity in New Mexico would be much less.
"The state is getting a very real return on its funding in terms of jobs sustained and created," said Accion President and CEO Anne Haines. "NMSBIC dollars have reached into the hands of low- and moderate-income families throughout the state to expand or launch new businesses. Overall, Accion's impact in New Mexico would be much lower without it."
Since last year, the NMSBIC has worked to increase the amount of funding provided to both Accion and The Loan Fund. It raised the revolving lines of credit for both organizations by $1.5 million, from a previous cap of $3.5 million for Accion and $8.5 million for The Loan Fund.
In part, that reflects some basic changes in the way NMSBIC has managed its funds since 2012.
Under former Gov. Bill Richardson, the NMSBIC concentrated heavily on invest- ing severance tax dollars in venture-capital funds in New Mexico. It committed about $30 million to venture funds, which used that money to invest in local businesses.
But the financial collapse in 2008 wiped out many of those startup companies, leading to some $13 million in investment losses for the NMSBIC.
After taking office, Gov. Susana Martinez replaced most of the NMSBIC's seven-member board of directors, and they, in turn, hired a new executive director and investment adviser, Russell Cummins. The incoming board members decided in 2012 to suspend all new commitments to equity funds.
It still holds about $17.5 million in venture-related investments in its portfolio from previous commitments. But while it awaits returns on those investments, the NMSBIC is now expanding its activity with lending programs, which allow NMSBIC funds to have a more immediate and direct impact on job creation, Cummins said.
"Our mission is to identify and fill gaps in capital for small businesses, and there's been a real gap in their access to bank loans," he said. "So we're focusing more on that now through our microlending partners."
Investing in lending organizations also allows more money to flow to businesses statewide, since the microlenders operate throughout the state, while venture-backed startups tend to concentrate in urban areas.
And there's a lot less risk of capital loss. The Loan Fund, for example, has a 97.5 percent repayment rate among borrowers. Accion has a 94 percent repayment rate.
As of April 30, the NMSBIC had $16.9 million in funding committed to lending programs. That's up from $12.4 million in June 2012.
And The Loan Fund expects to apply for another $2 million in NMSBIC funding in the next few months to satisfy continuous growth in loan demand, said President and CEO Leroy Pacheco.
"We lent about $4.5 million in all of 2013, but through the end of April this year, we already lent out $2.4 million, and another $1.8 million is now in the pipeline to close over the next month and a half," he said. "That means we'll have loaned as much in the first six months of this year as in all of 2013."
Haines said the increase in Accion's revolving credit also has allowed her organization to reach more New Mexico business owners.
"It's been catalytic in allowing us to open our doors even wider to credit needs statewide," she said.
Dziuba said that's good news for small-business owners in New Mexico.
"I encourage everyone who has a good business idea to inquire about a loan," she said. "Even if they don't lend you money, they will support your business in every way they can through education and mentoring."
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