How To Sign New Mexico Banking PPT

Industry sign banking new mexico rental application online

hi good afternoon thank you for joining us my name is joanna nelson and i'm with the new mexico economic development department and today you've tuned in to a presentation made by the new mexico finance authority addressing the small business recovery loan fund and this session is focused on help for small businesses before we get started i did want to let you know that we are recording this presentation so it will be available online you'll be able to access the recording after the presentation we'll send out that link and we will send out the slide so you will be able to access any live links or review any information that you missed please we want to encourage you to ask questions during the presentation you can type those questions in the box that you can see you should be able to see it on the right side of your screen there's a little gray horizontal box with an arrow that says questions and not that intuitive but there is a kind of a white space drop down space under the questions box so feel free to type those questions in and we will answer those at the end of the presentation if you have any questions while we're going about how to do that feel free to to send a chat you can do that as well you can send a chat to me and we can figure out how to get your questions answered i did want to let you know some information from the economic development department in in terms of covet 19 response you can find updates on our website which i've provided in these links we are putting out a weekly resource wrap up which has grants loans news articles and webinars every bit of information that's coming out about the recovery loan program we will include that so if you are not getting those um announcements you can use this link and you can sign up to get those we are putting all information and news on our social media channels which you can find on facebook twitter linkedin and um we do have regional reps throughout the state um that can help answer any questions um here's our youtube channel you can see all previous webinars and then you can access our opportunity zones website here is mark roper's contact he's the division director here's my contact and please reach out let us know how we can help so without further delay i want to turn it over to marquita russell who is the ceo of new mexico finance authority and adam johnson who is the chief officer of program operations so take it away marquita and adam great thank you very much joanna and thank you all for attending today um i'm very excited to be talking to you today about the small business recovery loan fund um our presentation today is really directed to those business advocates and technical assistance providers that will be helping small businesses uh find out about the fund and help them prepare for the application process it's not particularly different than the ones that we'll do for businesses directly but it's good information for you to have in terms of knowing how to prepare our businesses so the first thing to tell you is the small business recovery loan fund was created as part of the special session that happened in june it was i think representative matthews who introduced house bill 4 and senator candelaria who introduced and sponsored senate bill 3 and that was ultimately the bill that got signed into law on july 7th it's a 400 million dollar program that provides low interest rate loans to businesses that experienced hardship as a result of the public health orders stemming from the coven 19 pandemic they are three-year loans they can be used for a variety of expenses they do not require personal guarantees or collateral and they do not have payments for the first year specifically the amount of money that you can apply for is two times the monthly average expenses not to exceed seventy five thousand dollars um so that is not uh it's a it's a an outright amount so the amount you qualify for is the amount that um the application puts down you can't ask for less and you can't ask for more the interest rate is one half of wall street journal prime wall street journal prime right now is 3.25 so the current interest rate right now is 1.625 and that's fixed at the time of the loan so that won't change at all after the loan is made um and you know to for those of you that don't track prime rate it hasn't been changing a whole lot so we expect that rate to be there for a while as i just mentioned there is no collateral and there are no personal guarantees and the sponsors of the bill did that so that they would reduce any barriers of access to the loan program the minute you start to introduce collateral you start to introduce values of collateral and things that make it difficult for many many small businesses to access traditional financing so they took away as many barriers to access as they could with this program the loans themselves are three-year loans they are interest only the interest is paid annually so your first payment is not due for an entire year after the date the loan closes you'll have a second payment two years after the date the loan closes and then on that third anniversary you'll pay accumulated interest plus all principal at that point if the borrower or the the business needs to they can convert the loan to an additional three years with monthly principal and interest payments made at that time and the interest rate will stay the same so it doesn't change at the time that we convert the loan if indeed that's what the business would like to do so if the loan was made at 1.625 at the day of closing the day they converted it's at that same interest rate so there is no interest rate conversion um i have to point out that this is a loan program it's not a grant program that's an important element for determining constitutionality of the fund the eligibility requirements are fairly specific the statute requires that the business have a reduced operation or even be closed as a result of the public health order that their uh the business had annual gross revenues of less than five million dollars as determined by the 2019 tax return and that the business experienced a 30 decline in monthly gross receipts or monthly revenues um in april and may of 2020 as compared to those same months in 2019 so you have to have a 30 decline in april and a 30 decline in may it's not the combination but each of those months has to um have reached a 30 decline from over the 2019 month periods and we would note that businesses according to statute are either any for-profit businesses could be sole proprietor partnership um anything that's an legal entity or it could be a nonprofit specifically a 501c3 which are those charitable organizations or 501c6 which are generally associations the small business recovery loan fund in addition uh to creating uh the fund itself this the act created uh partners for the nmfa to work with in implementing the fund the first was what they call loan servicers and these are banks credit unions and community development financial institutions those are alternative lenders and they partner nmfa with those because those are the places where businesses go when they need access to funding so this is yet another access point for businesses to find out about uh the potential funding the finance authority will go through this in a minute but the finance authority will use these loan servicers to help make certain that the application is complete and that that the applicants have submitted the right documentation and and collect and inserted the right numbers into the right fields onto the application form the act also recognizes the critical role that technical services technical service providers play in the lives of small businesses and they create something called a service provider that can be paid a fee equal to one half percent of the loan amount that we make to a to a very small business and those would be businesses that have annual revenues of less than 500 000 so if it's a very small business and they're receiving ongoing technical assistance from a service provider um then they that service provider is eligible to receive a fee to help them uh pay for or to cover some of the costs associated with that technical service technical assistance specifically the service provider does have to be a non-profit or governmental organization so those would be your small business development centers your community development corporations there are a number of them across the state either in small cities or many of them actually in the more rural air in the more urban areas but they have to be able to provide technical assistance interactive technical assistance as it relates to sustaining business practices uh for training in marketing any sort of administration or financial management and complying with legal requirements licensing and tax liabilities so those are the specific requirements so what that means is that technical assistance providers cannot get paid that fee for helping a borrower submit an application but they can get paid a fee for providing the ongoing technical assistance to help them weather the storm that's been created by the pandemic i mean as i mentioned earlier those eligible um borrowers those less than five hundred thousand dollars if they indicate at the time of application that they're working with the service provider that service provider is eligible to get a fee all right so the application process which we'll go through in some detail adam's going to actually give you a walk-through of the application process is an online system and it's going to be accessed at our brand new website nmfinance.com those of you that are familiar with us if you are accessing us through the nmfa.net website it will be redirected to you so that you are able to access the online application the application opens next wednesday august 5th and it's open statutorily until december 31st or until the funds are gone whichever happens first um submitted applications are going to be reviewed by those loan servicers um but i would note that nmfa's actually the entity that makes the lending decision and will enter into the loan agreement so though these institutions are called loan servicers borrowers will not be working with those banks credit unions uh cdfis after they've submitted the application so once the application's complete and goes to nmfa for an ultimate decision as to whether or not to make the loan there that relationship um for purposes of the small business recovery loan is over so you won't be making your payments to that bank you won't be asking them for help later on you'll be coming to nmfa as we are actually the entity making the loan the the naming on that is a little confusing so i wanted to make sure that was clear and then pursuant to the statute applications are processed on a first come first serve basis so i wanted to go a little bit over just a high level of the application system adam will take you through more the detail about about how the actual process works um but the one thing i will make note make certain that you understand is that businesses will need to submit certain documents in electronic format at the time they apply um the application system though incredibly efficient does not allow businesses to save the application and return at a later time so we're going to be asking businesses as they come in do you have the documents you need to start if not we're not going to let you answer the next question because you will have wasted your time it will eventually time out on you those specific documents that are needed are going to be your 2019 business tax return and that will vary depending on the kind of business type that you are from a legal entity so you know if you are um if you're a non-profit for instance that's your 990 for the for profits there are different forms um we will need to see for um uh specifically for the for-profits copies of the forms that they submitted to the taxation and revenue department evidencing the receipts for the months of april and may of both 2019 and 2020 that's to help us determine the amount of decline that happened in that time period for nonprofits since they don't have taxable receipts they'll actually uh be required to submit monthly income statements or profit and losses for the fiscal years that include april and may of 2019 and 2020 and that can that can vary based on the nonprofit usually nonprofits fiscal years will correspond to their business activity cycles so that can be different we'll also need to see any cares act loan documentation that's a requirement of the program that we need to look at that and deduct that for determining the amount you're eligible to qualify for and then for for-profit businesses the statute requires that at least 80 percent of the control and ownership reside with new mexico residents so what we need to do is to determine whether or not business owners meet that definition which is i think 185 days in the state we are doing that through demonstration of uh you're paying personal income taxes to the state of new mexico and so we'll be looking for those 2019 personal income tax returns for any equity owners of the business if you've not yet filed your 2019 for this purpose only for new mexico residency we will also accept your 2018 with evidence that you have filed for an extension at the federal level and then lastly all businesses will be required uh to authorize nmfa to pull a business credit report so i want to make sure that it's clear that it's not for personal um credit it is for business credit and specifically what the finance authority will be looking for is responsible credit behavior in 2019 um in with the three types of creditors and these are creditors that we think are consistent across all of the eligible business types that includes sole proprietors non-profits businesses corporations and that is those businesses those creditors that deal with telecommunications utilities and renter mortgage so if you've shown responsible credit you're deemed to be credit worthy and can continue on in the process but if you have collections in 2019 or charge-offs in 2019 for telecommunications utilities or rent then that will disqualify you from the program as well um and then lastly uh no that was it that was the business credit report sorry uh this is my lastly applicants will be required to provide checking account information at the time of application and so the checking account will need to be held in the name of the applicant at a federally insured financial institution this is uh for two purposes one is for um so that we can turn around payments to businesses quickly so we'll need to know upfront that you've got that account and we're going to verify through a financial application system called plaid that that the account is valid that there weren't any mistakes in entering it for instance or that someone is not trying to perpetrate fraud and putting in your account information and we're also going to look to see that the account is named uh is held in the name of the applicant so we're going to do two very specific things i would note that as adam will show you in just a few slides here that the application system has built-in logic so applicants that do not meet the loan qualifications set out in statute will not be prompted to input that account information so you don't have to share your bank account information unless you are already deemed to be qualified and all of the information is held in a very secure system the system we use is called formstack so that's a secure system it's not subject to disclosure the only thing under law that we're able to disclose are the names of the borrowers so if in fact you apply and you're not and you you're not qualified your name is not released if you do qualify and we make you a loan for purposes of public disclosure we will say that you know that you were one of the recipients but the name amount the name of the loan i'm sorry the amount of the loan is not disclosed nor is the location of the business so it's solely just the name and with that i think i have uh fumbled through my slides i will turn it over to adam to go through the actual um application process did i did i missed a slide adam no i do 't believe so okay um let me just in the slideshow and get my right browser field up just alone here there we go great thanks everybody thanks for your time today um i'm going to go through a couple of sample applications uh i'm going to focus mostly on the criteria and the detail in the application and then and touch a little bit on the workflow um before you we have the very beginning of the application where we tried to provide uh all of the detail that's required to proceed right in the very beginning for the various types of organizations that are i'm going to be applying for this funding there are still a few notes left in here that i'll be removing as right before we go live um so you can please ignore those comments but as marquita mentioned uh the very first question asks you if you have 30 or 60 minutes to complete the application and i would actually share with the group that if you have all of your required documents i think the application will probably take closer to the 30 if not less it's incredibly simple and has been simplified so that you're not being asked questions that don't apply to you in the case of the sample before you hear what we've got uh is megan styles and uh megan is a is a sole proprietor uh and she's provided her basic information to finance authority and as you'll know um what happens with the the form is that it as marquita mentioned is any sensitive information is not asked until after you've gotten past the questions that will determine the eligibility um right here is the revenue and decline calculation since she's a sole proprietor it's asking for the numbers that are on the crs returns for these months in 2019 and 2020 the forum then go ahead goes ahead and calculates whether or not they meet that 30 uh drop in revenue to qualify and and then provides the answer back and then the applicant is allowed to proceed the next calculation in the form is the average adjusted monthly expenses business expenses is defined specifically this is the language that's in the statute excuse me and the calculation for this qualification or i'm sorry for this calculation which is what ultimately becomes the loan amount is the total expenses on the 2019 tax return and we are providing to the applicants in every case the exact uh form and the location of the number that they need to supply in this field just to try to make this incredibly clear and concise from the beginning in this case megan has 250 000 in total expenses the law requires this amount to be reduced by any deductions so uh for depreciation so megan's got 10 000 in depreciation for her tenant improvements in her facility um and then the law also requires that that annual amount be reduced by any uh cares funding and so megan received a forty thousand dollar ppp loan and that's being backed out of this 200 000 that amount is then divided by 12 and multiplied by 200 or 2 and calculates the loan amount for megan the next step in the process is uh megan would if if she's working with a credit union bank or cdfi she would begin typing in the name of uh that institution and the in the background we'll have all of the enrolled loan servicers uh who are going to be helping nmfa with the review process uh that'll automatically pop up the one that they know if they don't know who they would like to work with they can simply type i don't have one and provide that to nmfa and we can assign to a reviewer internally the next portion of the form requests an anticipated use of funds uh and i'd like to know for the audience an incredibly important point is that there is only one requirement of the anticipated use of funds and that is that not more than 20 percent be used for salaries of the owners of the company other than that this is really a request for us to be able to track an anticipated use and it doesn't have any onerous requirements on anything else other than the 20 or conversely the eighty percent go to operating business expenses um it calculates whether or not you've entered a hundred percent and also asked a question as to whether or not you expect the funds to be spent solely in new mexico or otherwise the legislation also tasked the finance authority with tracking employment related numbers to report back to the legislature and so here we start that process off by requesting the number of employees on march 1st the number of employees as of application date and then lastly any sort of optimistic or pessimistic view on the future as to what maybe that outlook looks like for a year from now and the finance authority will be coming back to the folks that do receive this funding uh with follow-up questions to see how in fact these numbers do turn out we have a few questions in here about the uh also what code they supply when they submit to their various tax agencies both federal and state for what industry they are in as well as any of the diverse business classifications that they may qualify or may have again and for reporting purposes only lastly the applicant will come to this section where we have uh all of a place for each one of the documents that needs to be uploaded we took this approach so that folks didn't feel like they had to scan a massive packet uh to get into one upload file so each there's a space for every single one that is being requested this section of the form does change it has logic depending on the answers to the questions that have been provided [Music] i will briefly show megan's other version of her business and so megan decided uh that she would incorporate and she became an s corp and in this instance you will see that some of the different logic has changed specifically i can take you down here where you can see that the request for the actual form or the information will appear has changed so we've done this to try to make this as clear as possible and easy on the applicant to fill out the form uh in addition most of the rest of these fields remain the same but in addition you can see what we've done down here is we've changed exactly what forward requested to be uploaded after the certification questions are asked that's when we will connect with our self-verifying third-party company called plaid uh we'll we will be providing another form inside of the uh secure website that this will be hosted on to enter your online banking credentials and that that will kick off the process of verifying the bank account and sending that information separately and securely to nmfa for um to provide the uh proceeds of the longboard from i should say and then just a little bit about workflow what you see here in front of you now is this form is actually it's doing three different separate things it's collecting the information from the applicant um it's also providing workflow to the various folks in the process so this step is actually going to come to the finance authority where we will be assigning the loan number verifying the flag process took place and then submitting it on to the first reviewer at the bank uh or cdfi or credit union um and i think that i've covered the application marquita unless there's something else you would like for me to demonstrate at this point i don't think so um i think at this point joanna we could probably go on to questions okay great thank you marquita thanks adam um as mentioned please feel free to type in questions you can find that on the right side of your screen in a little gray horizontal box there's a drop down white space that you can type those questions in so this is your chance and i will i'll go through these and some of them may be repetitive but it's great to make sure that the information that is coming out is confirmed and clarified so um i'll jump into these so um nicholas had a question about the required credit score can you guys um speak to what the required credit score or credit requirements are sure and that's a great question um we are not looking for a specific score so we are assuming that borrowers that applicants are credit worthy unless they demonstrate that they've got a collection or a charge-off from a telecommunications utility or rent creditor and that would be in 2019 so if in 2019 you didn't pay cell phone bills and you got to charge off that would disqualify you if after 90 days the utility company put you into collections that would disqualify you if it happened in 2019. so there isn't a specific score we're only looking for these very specific credit behaviors and experiences in 2019 okay thank you we had another question come in about is any of the information available in spanish thank you we probably should have mentioned that earlier we do have the frequently asked questions on our website in spanish the application will also be available in spanish so all the documents up until the loan agreement the loan agreement will be in english but everything else will be available in both english and spanish thank you if an applicant is missing a document will the lender be able to upload this document i guess they're referring to maybe at a further time right adam you want to go through how that process works sure so the the application will not be submittable without all of the required attachments that were listed so they would need to be prepared to have the full list of documents uh in electronic format when they start application however uh if the the application makes it to the reviewer and for some reason one of the documents is not legible there will be a process in place by which the reviewer can contact the applicant and send them a secure link to provide a new version of the document that's more clear and come back over in the same encrypted secure way that the initial one did and that holds true if in fact they submitted their 2018 business tax return we do require the 2019 the statute is very clear that the 2019 taxes are required so if they've submitted the wrong year that would be the opportunity for them to get that corrected as well thank you and another similar question about the application process does the application time out online if we're not actively typing sure i'll take that one um so the timeout period would is is extremely long i would say it's at least a couple of hours um i would find it pretty unlikely that that would occur to somebody with the length and the and the ease of filling out the application if you have all of your documents in front of you um so i don't anticipate that being a significant problem for folks and in addition if um if for some reason you know uh as we all have our challenges of of working remotely if all of a sudden you've got the attention of your or your two-year-old has your attention and you go away and you forget and you come back and it actually did time out you'll certainly be able to start the application process again okay thank you here's a question from kristen is there a possibility to obtain a paper copy of the application so technical assistance providers can guide them more efficiently there will be i believe what um the capability is they'll they will there will be a version of a pdf with all of the questions that will be available on our website um such that uh two folks say over over a call or a video chat could um could work on it and get questions answered together so that that's a yes yeah that i would just note that because the application system has built-in logic there will be different questions asked based on the previous answer so if you start off by saying that you're a non-profit you're going to get a slightly different set of directions for documents to upload for instance or the way in which the question is asked than if you started off as a for-profit so it is a little trickier because it it does have the built-in logic that's great because there there should be very few if any not applicables um but then that just kind of complicates a little bit um having that form you know in uh written format so we would just note that that that's an an issue that's going to come up depending on your borrower type and then i would also note that um you will one could could have an application a form open that's a technical assistance provider and look at it online in a different strategy to understand it and talking to a client okay thank you here is a question asking for more clarification on how the the the two times average monthly expense formula is calculated and they are asking is this calculated based on the 2019 tax return it is calculated based on the 2019 tax returns and it's specifically the total deductions or expenses um some of the tax forms use the word deduction um less the amount taken for depreciation less any amount taken for another section of the tax code called 179 unless any amount of a cares lack a cares act loan uh divided by 12 and then multiplied by two and that is specific in statute i want people to know we didn't come up with something that complicated on our own that was put into statute it's good to know okay thank you and let's see um we had a question come in and and if this doesn't make sense uh please sandra type in um how we can answer your question better but um it says when you say borrower are you saying the business name or the applicant name will be disclosed the borrower name is going to be disclosed so the applicant the entity that um takes on the loan okay that was a really cool question wow and then another question about what is the turnaround time on the loan process we the process itself of the application and the review um we are our pro we are setting a standard that we would fund loans um within 10 days of of the loan closing um we our processes are actually set to go faster more like five but um for purposes of um communicating out the expectation of we anticipate being able to close within 10 days of approval and one of the things we don't we only focus here on what happens as part of the application process but once you're approved there's no additional documentation that's needed so everything is is being asked up front there's a lot of documentation you know tax returns and things like that asked up front but at the point at which you're approved you'll then just be sent a set of documents to sign via the application system using their um electronic document signing process um very similar to like a docusign but it's their version of that process so there's nothing else to do other than to sign the documentation as directed send it back and then we will be depositing the money i think within about three days after that depending on when you sign the loan document and when we get it back but then we're funding these twice a week and that money will go directly into the account that's put on the very uh at the very front end when we are verifying that account and then we'll do one double check and make sure that money got deposited to the account that was put into the application so again we want to check against fraud and make sure that you got the money the way we think you should have received the money so we'll do that that last check after we send the money out okay thank you here's a question about uh the cares act loans um when you are deducting those loans does this include the advanced grant be a thousand dollars per employee as part of the sba program so it just requires the loan amount so the amount that we have deduct is the any loan that's received as part of the cares act okay thank you um let's see going through these some great questions um let's see some of these are repetitive so i'm just we've already answered them um and here's a question um if you can let's see do you have that up they're asking about the um where if you can repeat the where they can find the application oh sure it's going to be accessed from our website again starting next wednesday and it'll be the new website uh nmfinance.com if you google us and find out that our website is nmfa.net which was up until i think today our website address it will be redirected over so either nmfinance.com or if you google us and find nmfa.net it'll send you there as well okay thank you and then there was another question that is asking about the faqs um where they can find those those are also listed on our website okay all right and we've got one other question um that talks about can the funds be used to expand an existing operation which is negatively impacted because of covid um so i think the answer to that is as long as you meet the qualifying criteria specifically the 30 percent decline in revenues or gross receipts between april and may of 2020 as compared to 2019 as long as you meet that basic qualification that you have the that you meet the additional qualification uh about your annual revenues not exceeding five million dollars um and you have you meet the residency requirements the way in which you use the money you're limited only by the requirement that at least 80 percent be used for ordinary expenses if that is marketing expansion i don't think for our purposes we care we care if you are going to spend that on salary for equity owners that's really where our big concern comes in the definition of eligible uses is very broad the only place where it limits it is in the amount of money that can be spent on salaries for equity owners thank you that's great information and then we have a question too that this might be a good one to end on but um if you can repeat the contact or the um address that they can go to for further guidance with the application sure i would say that one of the best places to go if you have any questions is recovery at nmfa.net that is an email address that's manned by several folks um we are putting people's names on it now for um you know for those that want additional information for those that want a direct link at the point at which the application is open that's a good place but we're also answering questions there as well um we are working remotely and so the the best way to make certain you get a quick response is to email us at recovery nmfa.net and people will be getting back to you okay thank you marquita i think that sums up um the majority of the questions and i would like to point out that we will send these questions on to an mfa um and if we didn't answer your questions feel free to reach out to us and we'll get them to nmfa or reach out directly to the address that marquita just mentioned and we will uh address those um i think i got to every one of them i'm just looking over at them really quickly anything that um you want to add to frankita or adam i did see one question come through that i wanted to clarify um with regards to the qualifications uh between the 30 decline and the receipt of cares act loans and to reiterate it's just loans components not grants related to cares act and and it's just that that amount is deducted in the calculation for the loan amount so if you did experience the decline and you receive those fundings and you are less than five million dollars then you do qualify for the program as long as you also meet the residency requirements so having received cares act money does not disqualify you from the program okay thank you i don't have anything else to add thank you all very much for your time today and thank you joanna for hosting us today yes no problem and i i guess we i do want to add too that the when we send out the link to all the registrants we'll include the registration link for tomorrow's webinar which is at the same time and is directed at business or more general overview but thank you so much marquita thank you adam thanks for your time and all this great information and all the work that you're doing on this and thanks for all those that are participating thank you have a good day everyone bye you