Industry sign banking new mexico credit memo now
hi good morning my name is Johanna Nelson and I am with the Economic Development Department for the state of New Mexico and you have tuned in to an update that we are giving for geared at lenders to discuss recent changes to our kovat 19 business loan guarantee program so thank you for joining us I do want to mention a few things before we get started we have a maximum amount of attendees that are able to join and see visually our presentation so apologies to those that have have signed in later we are at our maximum participation point right now however you should still be able to hear us via audio and we will be sending out the PowerPoint presentation to everyone that signed up and we will let link the recorded recorded session on our YouTube channel and I do want to mention that that YouTube channel that we have can be found by going to youtube and searching New Mexico Economic Development Department and you will be able to find our channel and access this webinar as well as some other webinars that we have had in the past couple of weeks giving updates on various resources that are available so at the end of the webinar you are we will take questions so please feel free as we're going along to enter in your questions into the questions box on the right hand of your screen and we will get to those at the very end and I do want to mention that we are also joined with our by Jessica Busey body and she is the New Mexico Economic Development Department terney so she will be on the call and be able to to fortify any answers to your questions at the end so let's go ahead and get started I wanted to give an update and an overview of the guarantee program enemy DD can guarantee a portion of a loan or line of credit up to eighty percent of the principal are up to an amount of $50,000 on a commercial loan that is going to a business or nonprofit that is negatively affected by co vid 19 so what this means is that we provide a guarantee to a lender saying that we will pay the lender up to 80 percent of the principal in case of default we can't pay more than 50 thousand so this means that a loan could be $100,000 but we can only go up to $50,000 or if you think of it the other way we could only go up to 80 percent of a loan for that's about sixty two thousand five hundred our loan our loan requirements are our program requirements I should say are very flexible they can be used for a variety of different uses including working capital inventory payroll we don't have a lot of requirements on our end we're putting a lot of weight and analysis are a lot of weight I should say on the bank's analysis so if a bank is coming to us and saying that a loan is is good they want to do the deal except they need that extra guarantee we are open to to reviewing that we are hearing from many many different businesses that are requesting cash during this time for things like an immediate needs including working capital inventory payroll so we wanted to make sure and let folks know that those are eligible uses for the program one of the things that has recently changed in the last few weeks is week our guarantee can go up to two years when we first announced this program about two weeks ago we were saying that we could do increments of six months and we have gotten excellent feedback from our lender partners and within the lending community that there is a need to go to a higher term with our guarantee so we will go up to two years with that guarantee the loan can be a higher length of time the loan could be for seven years ten years etc however our guarantee can only go up to two years at this time our program is not limited to industry length of time and business or number of employees on the application the lender needs to disclose how the business has been negatively impacted in that application and I should mention that we have been in communication with our economist and they have been in communication with with various other state economists that have identified five top industries that have severely been affected by the the kovat 19 health crisis and and we are looking at those industries if an application comes in and it's an industry that has been identified as severely affected we are putting as you know emphasis on supporting those businesses and I should have had that in front of me that list but an example I know one is hospitality manufacturing entertainment food and and we can put those we'll make sure to put those make sure that those industries are clear however that being said if you're not in one of those top industries it doesn't mean that that's excluded from being able to utilize this program we do have a guidebook that is put on our website and that provides information especially for the lender about process how to submit an application what are the terms and how to request payment from us in case of a default so that's available online I also put that in the handout section so you should be able to download that so hopefully that's easily accessible highlighting the process so how does how does this process work it's important to note that the borrower goes to the lender discusses their financial needs first the lender is actually the one that applies to our program we've had numerous applications be submitted online from borrowers however we need a lender to come on and vouch that the project is viable except for the fact they mean to this extra guarantee so the lender in that application is providing the Supplemental information that we need to review the project so we have a review group that has made up of internal and external stakeholders they review the documents that the lender has a has provided and we get the lender decision within 24 to 48 hours initially we have said 24 hours but as we're getting our feet wet and more and more applications are coming in we have extended that to 48 hours if the lender gets an approval on the the guarantee the lender and nm EDD sign a guarantee of so that guarantee agreement is available on our website Jessica and I have revised it many times based on feedback coming from the lender community we want that agreement to be very clear very helpful so we would sign that agreement that agreement is the legal document that is stating the principal amount the guarantee ml the term of the loan etc so each loan that's submitted to this program would have a guarantee that's perspective of each loan so that would be me needed to be signed between us and the lenders that gets submitted to us the lender makes the loan and then we guarantee the loan so that's the process of how you submit an application we have had many questions obviously about how do lenders participate in the program as a side note this this program has actually taken money from a program that we had previous to Co good 19 called the collateral assistance program in that program we requested lenders to enroll into the program in this case we aren't asking lenders to enroll but we are asking that they identify that they are participating in the program our staff is receiving many many phone calls daily all hours of the day about where do they go what lenders are participating maybe they went to their lender and the lender doesn't know about the program they went to their lender and the lender identified that they're not participating in the program so they come back to us and ask where can I go to find a lender that is participating in the program so we have created a live list that's available on our on our website called lender partners you can access there and that's where we are compiling all of the lenders that have told us that they are participating as well as accepting new customers this is something to highlight we have talked to several of our lender partners that are participating however due to be the volume of inquiries that they're receiving they are only utilizing the program for existing customers and they don't necessarily want to be put on our public lists so all communication that we have with our lender partners we want to be clear and fulfill their wish that and define that they are or are not into accepting new customers during this time so every inquiry that we receive from borrowers first and foremost we tell them go check with your current lender to see and we try to to help guide them if we specifically know that their lender is not participating then we we do direct them to the lender partner list however I know that I personally always ask for to see which bank or lender the borrower is purchased that has their accounts with already so to submit the information that you are participating or want to participate it's very simple I included some examples on the right hand of your screen and it's basically we link to your website we provide the specific contact that you want to have if you have an application online we will put up any information that that you want to provide we do on that list I should mention and I do have a slide that's coming up we are trying to compile a list of lenders that are offering special assistance programs obviously is a question - that comes up for example some of the bigger bank I would use Wells Fargo as an example has numerous you know several special programs that they have the we're we're trying if we if we do become aware of those we are trying to highlight those as well and I know the credit union Association forwarded us a list of their credit unions and their special relief programs that they're offering so we have started a list at the very bottom of the page that highlight does relief programs as well and I see someone said they don't hear any audio Linda did so hopefully that is taken care of hopefully you can hear us okay so on the application let's go over the application we have tried to really tear down this application to make it as streamlined as simple as possible only collecting the the necessary information that we need the application is online you can also download a PDF to review it first because I don't think in that online application you have the ability to save it go back to it at a further date so we do have a PDF you can you can review that some of the the applet are some of the application questions the gist of it is we're getting the borrower's contact information as well as where they're located basic business information when did they start what was their revenue last year what's their current revenue what are the number of employees we're trying to get a gauge of how that is you know what it was compared to what it is now and then giving a brief explanation of how they are negatively impacted on then we ask the lender clarify why does the lender need the financial support this might seem you know redundant but but we do need a statement showing that because it's very obvious during this time you know the different needs whether it's a lender or business during this time but we need that clarified we are asking for what the loan will be used for and then the main part of the application that as I mentioned this is all very simple information the lender should be able to just get through very quickly is we're depending on the analysis and the underwriting from the bank so the owner should say lender but the lender is uploading a credit memo or Bank analysis or whatever respective documents that lender has that has provided their analysis and how they determined that that they're willing to do the project so that includes a lot of the the pertinent project information so on that application on the online application it is required to submit and credit memo and if that document is not uploaded we do follow up with the borrower and usually they go ahead and list a lender and I have been following up with each one of them and confirming that the lender actually did submit it and but I can tell that by a credit memo being uploaded I do want to remind people you can ask questions just feel free to type them in and we will take those shortly so going over the guarantee agreement repeating that this agreement is signed after each loan or line of credit is approved that agreement is available for review and we would encourage you as a lender to share that with your legal staff to review it get us any feedback on that if you have questions we are more than happy to review it with you and answer any questions we sign it upon approval enemy DeeDee and the lender and I wanted to highlight a few things that are in that agreement I put up a little sample of the service titles and the beginning of that but this is where it's stating the the finding things but if a guarantee is less than 24 months lender can request an extension within 10 days of guarantee maturity request can be made via email along with the status report of a loan I tried to highlight some of the things that we have received some frequently asked questions on and let's see the lender shall exercise the same degree of care and discretion servicing the loan as if it were on the lenders own account this is important too to highlight we are asking that lenders are the steward they become the stores of the state's money in a way that they are saying that this is you know these are very uncertain times but this is a project that we're okay with however through the circumstances we need this this extra guarantee we are asking that lenders notify the Department of any changes in the status to the loan so this is a in various ways this statement is presented throughout the document but this obviously is if if there are any changes you know in terms of whatever the litany of things could be major changes that that the Department should know about we would ask notification be had and that can be email very simple email and then the question obviously that we get a lot is what about the the payment the payment on the guarantee how does that happen so within 30 days of the default and I should mention that the event of default is defined by the lender so in this uncertain scenario a lot of the businesses and lenders are entering into these these loans and these financial agreements and might have special relief programs so areas of default might be a little grey we're putting that on the bank the bank is going to tell us when the lender has defaulted within 30 days so when they let us know we'll have a link on our website that will be a request for payment you submit that request for payment we will pay you within 30 days the guarantee up to 80 percent of the principal that is owed at that time there have been a little bit of questions about you know in terms especially if there are any lenders that are engaged in an SBA lending this is a different process in the way that we don't we are not requiring the bank to collect on all of the the collateral and you know finalise that at this point they can route the lender can submit a request for payment we pay and then we're staying subsequent to that payment if any additional funds are captured or the default is cured the lender takes care of of their loss first and then they pay us if there's a difference they pay us you know on on the amount that we paid them up to 80% so hopefully that's clear we want that to be very simple process so you can as mentioned access all of these documents the application that's all available online and here's a snapshot of what is provided I think I captured everything just gives a quick process overview it shows you where the lender can apply the PDF version of the application a list of the partnering lenders and then below documents that's where you can find again the online application that guarantee the list of partner lenders the guidelines and then you also have a quick fact sheet if that is relevant or helpful to anyone that explains the program very simply and in fact I might throw it out there that because we unrolled this program so quickly and you know two weeks ago many lenders still don't know about the program so there is a need for borrowers to present information to their lenders about the program so that might be a helpful thing I think that does have my contact on it that might be a helpful thing to forward to any lenders that have questions about the program so on our website we are using our response page what we're calling it as
platform to provide information about additional resources and if you go to our website there's the link at the top of this list you're going to find first and foremost the SBA program right now we are just linking to the disaster loan program that has been in place for a week or two but as you know on Friday with the passing of the cares Act SBA will be administering or I should say seven a lender's will be administering various programs in addition to the disaster loans with which the FBA is administering so we we're linking to that first and foremost I should make it a point to say because so you know those loans are very little interest in in the case of the payroll program the loan can be taken away or I should say forgiven based on if the employer is employing their staff so right now many of those programs are extremely advantageous for the businesses so we are directing people there and we would hope that our lender partners are doing the same thing if it's if it's in the business's best interest again we are pointing people to the SBA and then we're saying go talk to your lender that you already have accounts but in addition to the SBA program you can find our information about our programs you can also find additional resources that are like for example in the philanthropic community that are offering grants we're doing our best to update it about federal programs like USDA and EDA that are offering resources so that's a good place to bookmark and be going back to currently every day so here's a link I wanted to call out this is on our website but the federal resources this is a pretty good comprehensive list of all the federal programs and what relief resources they have available also I want to point out in terms of technical assistance and emergency planning many of these organizations which are listed the top three being SBA partners are available especially the SBDC to assist with SBA loans and any questions guarding the SBA program MEP is specifically for manufacturers and the loan fund is a CDFI that is available to make loans and I should throw it in there that this wasn't added but the state business investment council the SBI C you might have seen the press release come out that the SBS D has invested twenty five million dollars in participating CDFI the loan fund the lift fund and dream spring to do low-interest loans and we will only I don't think we're linking currently to those on our website but we will we will do that as well and we will we will participate with them as well in our guarantee program so here is a call that highlight the compilation of special assistance programs or relief programs if you have a program within your organization and you would like to be listed on our list or we can send that out to our network highlight it on our updates page we can do that just fill in the information that's listed in blue email that to me and we'll get that out before we end and take questions I would be remiss if I didn't take this opportunity to remind you even amidst the health crisis that the census is going on so it's very very important that we are actively engaged with the census we're asking our neighbors our customers everyone to participate in this so you should have received information at your residence if you didn't feel free to reach out to to us we can get you the right information that you need so please take a few minutes to fill out the census form so I'd like to open it up for questions feel free to get as technical as you want no question is a bad question and let me pull the information out Jessica did you have anything to add before we take questions no Mary no I did a good job covering everything okay mmm take please and thanks for bearing with us okay and I'm just going to read through these so we had a question come in from Stan asking will you consider a guarantee for an unsecured loan or a line of credit so we will and again the enemy BD is not making the you know we don't have hard and fast rules on what many I should say many roles on the the eligibility of the loan so we're putting that back on the bank and saying what are you comfortable with if you tell us that you have a line of credit or that is pretty much unsecured give us the reasoning why it is a an okay project and you just need our guarantee maybe the best business has an excellent relationship with the lender excellent previous cash flow etc so that is correct and in fact I think I have seen a couple of applications come in that were pretty much unsecured and I see let's see are so we got a question from crisp saying if your company doesn't apply for an SBA disaster loan or maybe it says if your company does apply for an SBA disaster loan are they disqualified from an enemy TD loan great question and the answer is no you can apply for an SBA disaster loan as well as going to your bank and working with them on an additional funding source however that is going to come into play with however the lender is reviewing that you know if you're over leveraged the businesses but we are seeing I think and I'm speaking not from an authoritative place on this but I think I have heard that the SBA is taking about two to three weeks to fund on those disaster loans so that's something to take into consideration if you're a business you're applying to SBA but you need quicker cash is it a quicker route to go to your local lender and use our guarantee and let's see Christina had a question and I think she's hitting at a lot of you know similar sentiment that she is overwhelmed with with a lot of the information and wonders if there are people to assist and help walk a small business through this process so really great question you're not alone in feeling like this I think all right you know I for one feel like this it's difficult keeping track of all of the programs that are out there and figuring out which ones are the best fit so my best advice would be you're welcome to reach out to enemy DD we have and I think I have a live scene so here's a list of the regional representatives these folks are located in different regions of the state and represent the department they are able to help walk a small business through resources of where to go the SBDCs small business development centers are a fantastic resource and they are able to to assist in more of a consulting role so it's score so it's worth and they can give guidance we are working on a document that is trying to simplify this process and hopefully we'll get that with them up on the next couple of days but kind of almost doing a map or a one-two-three process and hopefully that will help so stay up to date with our website and please reach out to the folks that are available to provide technical assistance angel had a question about would I qualify for a loan even if I have only been in business less than a year and again going back to the bank's we don't have a disqualifier that you would not be able to apply to the guaranty program this is on the bank and we have talked to many many lenders in in the last few weeks and I have seen some some applications come through with a very early stage businesses so it does depend on the lender how comfortable they are with the length of time you've been in business and I will have to say on the SBA program there's not a disqualifier on that either from what I read over the weekend and Laura had a question I think this is hitting on a lot of concerns that that we're seeing from the field that's similar to what Christina said about knowing what are the best fit for a business especially in relation to the new programs that SBA will be administering through the cares Act and she's waiting for clarification on how the forgiveness is calculated so this is a great opportunity to add that we are having a webinar that has tentatively been scheduled for Friday to go into and dissect what programs are available the the cares act for small businesses so when I send this presentation out I will include the sign up for that webinar and we hope to have a representative from the SBA as well as a federal person that can speak to these as well as the SBDC will also have resources to speak to other funding sources like someone from the governor's office that can speak to the New Mexico altogether fund which is grant fund so that might be a good place Laura for you to find additional information and again I'll highlight utilizing those technical assistance organizations like the SBDCs to really get in there and get into the weeds with you on your respective details of the program and be able to help guide you through that and Janice had a question that's related to the technical assistance to about our SBDCs helping with free counseling and the question is yes confirming that it's free and Michael had a question are we limited to only state banks in state banks that's a really good question no it's a little gray area for us we would ideally like to work with in state banks however if a bank is from out of state is willing to support the product business in New Mexico we will work with that lender as well so I'm not seeing any more questions I think we've got to them all if you have any questions feel free to go ahead and type those in and I'm going to just really quickly point out that a place to stay connected with any updates from the department can be found obviously on our website and then Facebook and Twitter are our places that you can get breaking news and then if you click on that link and get on the mailing list that's where you will receive the blasts that go out announcing various webinars and then here are some some contacts the deputy director the economic division director and then myself and then this is a link at the very bottom of the page going to the regional representative and here are those contacts again and then I will check really quickly and I think that that those are all the questions so please I know we're all going through a very difficult time right now but the department is doing our best to compile resources help you navigate those resources we want to work with our lender partners our main mission and our angle is to help get capital out into the market to help businesses during this challenging time so if you're a lender please reach out to us if we hadn't haven't already connected and let's work together figure out how we can work together and hopefully utilize this this program that we have if it's relevant and if it's helpful so when increase I want to share my appreciation for your time today please reach out let us know how we can help and be a assistance and thanks Jessica for joining the call and please follow up with us and take care stay healthy and be well and we'll all get through this so okay thank you all hope to see you on Thursday bye
