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New Mexico is home to over 152,000 small businesses as reported by the Census Bureau. These businesses employ over 331,000 residents according to the US SBA Office of Advocacy Profile. The majority of these employers are in the Construction and Public Administration fields.

With so many businesses and more applications submitted every month, banks are receiving more requesting for funding. There are many reasons a small business may need to apply for funding. A few of these include:

  • Location Expansion or Moving
  • New Inventory
  • New Equipment
  • Acquisitions
  • Hiring New Talent
  • To Build Credit For Future Lending Purposes

Loans allow business owners to operate and expand when their current capital doesn’t allow it. While there are many responsibilities that come along with a business loan, there are many routes a business owner can take to improve their overall business when they have the necessary funding available.

What Type Of Business Loans Are Available?

As a business owner, you have many options for getting funding for the things you need. These include:

Standard Business Loans

This is the most popular form of business funding. A business owner applies to a lending institution for funding. These typically require a good credit history of both the owner and the business itself as well as a good bit of collateral. Lending institutions have strict requirements for these types of loans.

Business Lines Of Credit

A small business line of credit is somewhat similar to a credit card. The business is given a maximum amount of money it can withdrawal for funding. The business only pays interest when they withdrawal money from this account. The interest is only charged on the amount they currently withdrew. This is a great option to help businesses that have large seasonal expenditures cover their expenses.

Small Business Administration Loans (SBAs)

These are similar to the standard business loans, however, they are backed by the Government. This allows lending institutions to recover funds from loans that borrowers default on. There are strict requirements for these types of loans and they do take much longer to apply for than standard loans. However, those who have been denied for standard loans can typically still get approved for an SBA.

Invoice Factoring

This is a newer practice that allows businesses to get cash from accounts receivables that are outstanding. Many businesses will offer their customers up to 60 or 90 days to pay their bill. This puts stress on the business as it has to cover the current expenses during this waiting period. Factoring companies will give businesses a percentage of cash up-front for their open invoices. This allows the business to get funding for these expenditures. The factoring company will charge the business a certain percentage of the total invoice as a fee for the service.

How Do I Apply For A Loan?

New Mexico has many lending institutions that are ready to help you apply for funding. Some of the top rated institutions in the state include:

  • Bank Of The Rio Grande (Las Cruces)
  • Bank Of The SouthWest (Roswell)
  • Community 1st Bank Las Vegas
  • The James Polk Stone Community Bank (Portales)
  • Western Bank (Lordsburg)

Any of these banks can help with your funding needs. They’re all approved to offer SBAs as well.

It’s a good idea to shop around for the best rates you can find before agreeing to any loan. Different banks take into account different information when accessing your risk as a borrower. You may find that you can get a much lower rate at a different bank.

The Questions You Must Answer

When you sit down with a representative from a local New Mexico lender or even when applying with an online application, there are some specific questions that you will need to answer.

  • What is the purpose of the loan?
  • Exactly how much money do you need?
  • When do you need the funding by?
  • How long of a repayment term do you want?
  • What collateral can you and the business use? What is the value of these assets?
  • What are the business’s current assets and liabilities?
  • What are the business’s current income and financial performance records?

You should be prepared to answer each and every one of these questions. By preparing ahead of time you will come across as more organized to the representative and more direct with your time.

Documents You Need Ready When Applying

When you’re getting ready to apply for a loan you should assemble the following documents. This will help streamline the lending process and make it less stressful for you.

  • Profit And Loss Statements
  • Business Certificate and License
  • Past Two Years Tax Returns For Business And Business Owner
  • Current Balance Sheet
  • Your Business Plan
  • Bank Statements Dating Back One Year

These are the base document requirements when applying for any type of business loan. Depending on the specific lender you may be required to bring other documents. Speaking with a loan specialist at the lending institution you’re applying to will help you understand exactly what documents you will need.