SB 3 — SMALL BUSINESS RECOVERY ACT

Balances remaining in the fund [at the end of fiscal year 2022] as of December 31, 2022 and not identified by the authority as necessary to administer the Small Business e t 17 Recovery and Stimulus Act over the life of the loans provided w l n d 18 pursuant to that act shall revert to the severance tax = = 19 permanent fund.

The authority may expend no more than [one] a l i a e r 20 two percent of the [balance of the fund] state investment a t m m 21 council's commitment pursuant to Section 7-27-5.15 NMSA 1978 d r e 22 for administering the Small Business Recovery and Stimulus ActAct. c e s k 23 [of 2020].

e a n b 24 B.

Upon the effective date of this [2020] 2021 act, u [ the authority and the state investment council shall coordinate .219463.5 - 6 - SFC/SB 3 to develop a funding schedule to ensure that sufficient funding, as provided for in Section [10 of this 2020 act] 7-27-5.15 NMSA 1978, is made available to the authority to carry out the provisions of the Small Business Recovery and Stimulus ActAct." [of 2020]." SECTION 4.

LOANS--TERMS.-- SFC/SB 3 Page 4 A.

[ofThe 2020.authority may designate one or more application periods and shall review small business recovery loan applications received in each application period in the order in which the completed applications were received and shall provide a determination to the applicant within a reasonable time period after review.

The authority shall reviewmake allloans small business recovery loan applications in the order in which the completed applications were received and shall provide a determination to thequalifying applicant as soon as practicable] The authority may designate one or more application periods and shall review small businessbusinesses; e t 17 recovery loan applications received in each application period w l n d 18 in the order in which the completed applications were received = = 19 and shall provide a determination to the applicant within a a l i a e r 20 reasonable time period after review.

Theprovided authoritythat shallfunds makeare aavailable tand mthe mqualifying 21small loansbusiness tosatisfies qualifyingcredit smalland businesses;identification criteria, as determined by the authority.

providedThe thatauthority fundsshall areadopt drules rto egovern 22the availableapplication procedures and therequirements qualifyingfor smalldisbursing businessloans [meetsunder the cSmall eBusiness sRecovery kand 23Stimulus requisiteAct, creditworthiness]including satisfiesrequirements creditconsistent andwith identificationthe epurpose aof nthat bact 24for criteria,determining asthe determinedeligibility byof thequalifying authority.small businesses for loans;

Theprovided authoritythat shallthe uauthority [may adoptissue rules to governpermit thea applicationbusiness proceduresthat anddoes .219463.5not -have 7a -record SFC/SBof 3actual requirementslosses, forbut disbursingcan loansotherwise undersatisfy the requirements of the Small Business Recovery and Stimulus ActAct, [ofto 2020],apply including requirements consistent with the purpose of that act for determininga the eligibility of qualifying small businessesbusiness forrecovery loans;loan.

provided that the authority [shall not create additional requirements for eligibility other than those provided by that act] may issue rules to permit a business that does not have a record of actual losses, but can otherwise satisfy the requirements of the Small Business Recovery and Stimulus Act, to apply for a small business recovery loan.

The authority shall evaluate [the creditworthiness of an applicant] an application based on information received from the applicant [whichas maywell includeas anthird-party independent credit reportingand agencyidentification reportreports. when available.

The authority mayshall usemake fundingsmall madebusiness availableSFC/SB for3 thePage Small5 Businessrecovery Recoveryloans Actin ofaccordance 2020 to contract with a loan e t 17 servicer to assist in carrying out the provisionsfollowing: of the Small w l n d 18 Business Recovery Act of 2020, including determining:

=(1) =the 19loan (1)amount whethershall be in an entityamount meetsnot theto requirementsexceed athree lhundred ipercent aof ethe rqualifying 20small tobusiness's beaverage consideredmonthly abusiness qualifyingexpenses smallas business;determined by the authority;

aprovided tthat mthe mmaximum 21loan (2)amount whethershall abe qualifyingno smallgreater businessthan isone dhundred rfifty ethousand 22dollars eligible($150,000); for a small business recovery loan;

and(2) c e s k 23 (3) the amountterms thatof the qualifyingloan smallshall erequire athat: n b 24 business is eligible to receive for a small business recovery u [ loan] as well as third-party credit and identification reports.

.219463.5 - 8 - SFC/SB 3 [D.] C.

The authority shall make small business recovery loans in accordance with the following:

(1) the loan amount shall be in an amount [equal to two] not to exceed three hundred percent of the qualifying small business's average [adjusted] monthly business expenses [from the previous calendar or fiscal year] as determined by the authority;

provided that the maximum loan amount shall be no greater than [seventy-five thousand dollars ($75,000)] one hundred fifty thousand dollars ($150,000);

(2) the terms of the loan shall require that [the loan recipient]:

1) ordinary and necessary business expenses, including capital expenses, other than compensation for [employees] an individual who [own] e t 17 owns equity in the business;

2) making adaptations or w l n d 18 improvements to assets, including real property, that are = = 19 necessary due to the coronavirus disease 2019 public health a l i a e r 20 emergency to protect the public health;

and 3) purchasing or a t m m 21 improving any assets for the purpose of developing and growing d r e 22 the qualifying small business's e-commerce production and sales c e s k 23 capacity;

e a n b 24 (b) for a loan recipient that is a non- u [ employer business, the recipient shall use a minimum of fifty .219463.5 - 9 - SFC/SB 3 percent of the proceeds of the loan for:

[(b)](b) (c)for thea loan recipient providethat is a writtennon-employer certificationbusiness, signedthe byrecipient anshall appropriateuse officera minimum of thefifty qualifyingpercent smallof businessthe thatproceeds certifiesof that:the loan for:

1) theordinary officerand understandsnecessary that the business isexpenses, receivingincluding acapital loanexpenses, underSFC/SB the3 SmallPage Business6 Recoveryother andthan Stimuluscompensation Actfor [ofan 2020]individual thatwho mustowns beequity repaidin by the businessbusiness; with interest under the terms of the loan agreement;

2) allmaking documentsadaptations submittedor inimprovements supportto ofassets, theincluding ereal tproperty, 17that loanare applicationnecessary anddue allto statements and certifications made in w l n d 18 the loancoronavirus applicationdisease are2019 truepublic andhealth accurateemergency to theprotect best of the =public =health; 19 officer's knowledge;

[3)and the3) officerpurchasing hasor aimproving reasonableany basisassets tofor a l i a e r 20 believe that, as of the datepurpose of originationdeveloping of the loan and agrowing t m m 21 receipt of the loanqualifying proceeds,small thebusiness's businesse-commerce doesproduction notand expectsales tocapacity; d r e 22 permanently cease business operations or file for bankruptcy;

c(c) e s k 23 4)] 3) prior to the issuanceloan ofrecipient theprovide public health order issued e a nwritten bcertification 24signed by thean secretaryappropriate officer of healththe onqualifying Marchsmall 23, 2020, the business wasthat ucertifies [that: current on all obligations pursuant to the Income Tax Act, the .219463.5 - 10 - SFC/SB 3 Corporate Income and Franchise Tax Act, the Withholding Tax Act, the Gross Receipts and Compensating Tax Act and the Unemployment Compensation Law applicable to the business's operations;

and1) [5)]the 4)officer allunderstands loanthat proceedsthe willbusiness beis usedreceiving fora purposesloan asunder provided in the Small Business Recovery and Stimulus Act [of 2020], including that nomust morebe thanrepaid twentyby percent of the proceedsbusiness maywith beinterest usedunder asthe compensationterms forof employees who own equity in the business;loan agreement;

and2) [(c)]all (d)documents thesubmitted loanin recipientsupport provideof the authorityloan withapplication ongoingand informationall relevantstatements toand thecertifications reportingmade requirementsin of the authorityloan providedapplication inare Sectiontrue [7and ofaccurate to the Smallbest Business Recovery Act of 2020]the 6-32-7officer's NMSAknowledge; 1978;

(3)3) prior to the termsissuance of the loanpublic shallhealth notorder requireissued thatby the qualifyingsecretary smallof health on March 23, 2020, the business providewas acurrent personalon guaranteeall orobligations collateralpursuant to securethe [the]Income aTax loanAct, inthe Corporate Income and Franchise Tax Act, the amountWithholding ofTax seventy-fiveAct, thousandthe dollarsGross ($75,000)Receipts orand less.Compensating Tax Act and the Unemployment Compensation Law applicable to the business's operations;

Forand a4) all loan inproceeds ewill tbe 17used anfor amountpurposes greateras thanprovided seventy-fivein thousandSFC/SB dollars3 ($75,000),Page w7 l n d 18 the authoritySmall mayBusiness requireRecovery aand personalStimulus guaranteeAct, orincluding collateralthat tono =more =than 19twenty securepercent the amount of the loanproceeds greatermay thanbe seventy-fiveused aas lcompensation ifor aemployees ewho rown 20equity thousandin dollarsthe ($75,000);business;

providedand that(d) the authorityloan shallrecipient aprovide tthe mauthority mwith 21ongoing defineinformation specificrelevant guidelinesto relatedthe toreporting personalrequirements guaranteesof orthe dauthority rprovided ein 22Section collateral;6-32-7 NMSA 1978;

and(3) cthe eterms sof kthe 23loan (4)shall not require that the applicationqualifying forsmall business provide a loanpersonal mustguarantee beor ecollateral ato nsecure ba 24loan receivedin nothe lateramount thanof [Decemberseventy-five 31,thousand 2020]dollars May($75,000) 31,or 2022.less.

uFor [a [E.]loan D.in an amount greater than seventy-five thousand dollars ($75,000), the authority may require a personal guarantee or collateral to secure the amount of the loan greater than seventy-five thousand dollars ($75,000);

The authority may exercise any power .219463.5 - 11 - SFC/SB 3 provided tothat the authority inshall thedefine Newspecific Mexicoguidelines Financerelated Authority Act to assistpersonal inguarantees theor administrationcollateral; of [this] the Small Business Recovery and Stimulus Act;

providedand that(4) the powerapplication isfor consistenta withloan themust provisionsbe ofreceived [this]no thatlater act."than SECTIONMay 5.31, 2022.

D.

The authority may exercise any power provided to the authority in the New Mexico Finance Authority Act to assist in the administration of the Small Business Recovery and Stimulus Act;

provided that the power is consistent with the provisions of that act." SFC/SB 3 Page 8 SECTION 5.

Small business recovery loans shall be made for [an initial loan period of three] loan periods not to exceed ten years, as determined by the authority.

[PaymentInterest ofshall thebegin interestto accruedaccrue on a small business recovery loan shall be due in annual installments with e t 17 the first interest payment due on the first anniversary of the w l n d 18 funding date of the loan,loan. and with each subsequent interest = = 19 payment due on each subsequent anniversary of the funding date a l i a e r 20 of the loan thereafter until the loan is paid in full.

PaymentThereafter, afor t m m 21 on the outstandingnext principaltwo ofyears, a small business recovery loan d r e 22 may be made on the thirdauthority anniversary of the funding date of the c e s k 23 loan, or the outstanding principal and interest on the loan may e a n b 24 be converted to a loan, at the request of the borrower and with u [ the consent of the authority, to be paid in monthly .219463.5 - 12 - SFC/SB 3 installments over a period of three additional years] Interest shall beginrequire tointerest-only accruepayments on a smallschedule businessdetermined recoveryby loan on the firstauthority. anniversary of the funding date of the loan.

Thereafter, for the next two years, the authority shall require interest- only payments on a schedule determined by the authority.

Receipts from the repayment of principal or interest accrued on the loans made pursuant to the Small Business Recovery and Stimulus Act [of 2020] shall be transferred from the authority to the state investment council and deposited in the severance tax permanent fund.

No provision in a small business recovery loan or the evidence of indebtedness of the loan shall include a eSFC/SB t3 17Page 9 penalty or premium for prepayment of the balance of the w l n d 18 indebtedness." = = 19 SECTION 6.

Section 6-32-7 NMSA 1978 (being Laws 2020 (1st a l i a e r 20 S.S.), Chapter 6, Section 7) is amended to read:

a t m m 21 "6-32-7.

REPORTS--CONFIDENTIALITY.-- d r e 22 A.

Prior to October 1, 2021 and each October 1 for c e s k 23 the proceeding four years, the authority shall submit a report e a n b 24 to the legislature, the legislative finance committee, the New u [ Mexico finance authority oversight committee, the revenue .219463.5 - 13 - SFC/SB 3 stabilization and tax policy committee and any other appropriate legislative interim committee.

The report shall provide details regarding the loans made pursuant to the Small Business Recovery and Stimulus ActAct. [of 2020].

and eSFC/SB t3 17Page 10 (7) an overview of the industries and types of w l n d 18 business entities represented by loan recipients.

= = 19 B.

Information obtained by the authority regarding a l i a e r 20 individual loan applicants, including information used to a t m m 21 analyze an application, is confidential and not subject to d r e 22 inspection pursuant to the Inspection of Public Records Act;

c e s k 23 provided that nothing in this section shall prevent the e a n b 24 authority from disclosing broad demographic information and u [ information relating to the total amount of loans made, the .219463.5 - 14 - SFC/SB 3 total outstanding balance of loans made pursuant to the Small Business Recovery and Stimulus Act [of 2020] and the names of the loan recipients." SECTION 7.

In making investments pursuant to Subsection A of this section, the council shall make investments in New Mexico private equity funds or New Mexico businesses whose investments or enterprises enhance the economic developmentSFC/SB e3 tPage 1711 development objectives of the state.

w l n d 18 C.

The state investment officer shall make = = 19 investments pursuant to Subsection A of this section only upon a l i a e r 20 approval of the council and within guidelines and policies a t m m 21 established by the council.

d r e 22 D.

c e s k 23 (1) "New Mexico business" means, in the case e a n b 24 of a corporation or limited liability company, a business with u [ its principal office and a majority of its full-time employees .219463.5 - 15 - SFC/SB 3 located in New Mexico or, in the case of a limited partnership, a business with its principal place of business and eighty percent of its assets located in New Mexico;

(c) has at least one full-time manager with at least three years of professional experience in assessing the growth prospects of businesses or evaluating eSFC/SB t3 17Page 12 business plans;

w l n d 18 (d) is committed to investing or helps = = 19 secure investing by others, in an amount at least equal to the a l i a e r 20 total investment made by the state investment officer in that a t m m 21 fund pursuant to this section, in businesses with a principal d r e 22 place of business in New Mexico and that hold promise for c e s k 23 attracting additional capital from individual or institutional e a n b 24 investors nationwide for businesses in New Mexico;

and u [ (e) accepts investments only from .219463.5 - 16 - SFC/SB 3 accredited investors as that term is defined in Section 2 of the federal Securities Act of 1933, as amended (15 USCA Section 77(b)), and rules and regulations promulgated pursuant to that section, or federally recognized Indian tribes, nations and pueblos with at least five million dollars ($5,000,000) in overall investment assets.

(a) in conjunction with cooperative investment agreements with parties that have demonstrated abilities and relationships in making investments in new, SFC/SB 3 Page 13 emerging or expanding businesses;

e t 17 (b) in a New Mexico aerospace business w l n d 18 that has received an award from the United States government or = = 19 one of its agencies or instrumentalities:

1) in an amount, not a l i a e r 20 less than one hundred million dollars ($100,000,000), that is a t m m 21 equal to at least ten times the investment from the severance d r e 22 tax permanent fund;

and 2) for the purpose of stimulating c e s k 23 commercial enterprises;

or e a n b 24 (c) in a New Mexico business that:

1) u [ is established to perform technology transfer, research and .219463.5 - 17 - SFC/SB 3 development, research commercialization, manufacturing, training, marketing or public relations in any field of science or technology, including but not limited to energy, security, defense, aerospace, automotives, electronics, telecommunications, computer and information science, environmental science, biomedical science, life science, physical science, materials science or nanoscience, using research developed in whole or in part by a state institution of higher education or a prime contractor designated as a national laboratory by an act of congress that is operating a facility in the state, or an affiliated entity;

and SFC/SB 3 Page 14 (3) the investments represent no more than e t 17 fifty-one percent of the total investment capital in a w l n d 18 business;

provided, however, that nothing in this subsection = = 19 prohibits the ownership of more than fifty-one percent of the a l i a e r 20 total investment capital in a New Mexico business if the a t m m 21 additional ownership interest:

d r e 22 (a) is due to foreclosure or other c e s k 23 action by the state investment officer pursuant to agreements e a n b 24 with the business or other investors in that business;

u [ (b) is necessary to protect the .219463.5 - 18 - SFC/SB 3 investment;

On July 1 of each year, the state investment officer shall SFC/SB 3 Page 15 determine whether the invested capital in the small business investment corporation is less e t 17 than two percent of the market value of the severance tax w l n d 18 permanent fund.

If the invested capital in the small business = = 19 investment corporation equals less than two percent of the a l i a e r 20 market value of the severance tax permanent fund, further a t m m 21 commitments shall be made until the invested capital is equal d r e 22 to two percent of the market value of the fund.

c e s k 23 G.

In addition to the investments provided for in e a n b 24 Subsections A and F of this section, the state investment u [ officer shall make a commitment to the New Mexico finance .219463.5 - 19 - SFC/SB 3 authority to invest [the lesser of four hundred million dollars ($400,000,000) or ten percent of the market value] five hundred million dollars ($500,000,000) of the severance tax permanent fund in investments made pursuant to the Small Business Recovery and Stimulus ActAct; [of 2020];

(1) investments made pursuant to and in compliance with the Small Business Recovery and Stimulus Act [of 2020] shall be deemed to be in compliance with the prudent investor rule set forth in the Uniform Prudent Investor Act;

The state investment officer shall report eSFC/SB t3 17Page 16 semiannually on the investments made pursuant to this section.

w l n d 18 Annually, a report shall be submitted to the legislature prior = = 19 to the beginning of each regular legislative session and a a l i a e r 20 second report no later than October 1 each year to the a t m m 21 legislative finance committee, the revenue stabilization and d r e 22 tax policy committee and any other appropriate interim c e s k 23 committee.

Each report shall provide the amounts invested in e a n b 24 each New Mexico private equity fund, as well as information u [ about the objectives of the funds, the companies in which each .219463.5 - 20 - SFC/SB 3 private equity fund is invested and how each private equity investment enhances the economic development objectives of the state.

TEMPORARY PROVISION--REFINANCING OF PREVIOUS LOANS.--For any small business recovery loan provided pursuant to the New Mexico Small Business Recovery Act of 2020 made prior to the effective date of this act, the New Mexico finance authority shall permit the recipient of that loan to refinance the loan subject to terms consistent with this 2021 act.

EMERGENCY.--It is necessary for the public peace, health and safety that this act take effect SFC/SB 3 Page 17 immediately.

-SFC/SB 213 -Page e t 17 w l n d 18 =3 =5 197 a9 l25 i a e r 20 a t m m 21 d r e 22 c e s k 23 e a n b 24 u [ .219463.5