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SB 3 SMALL BUSINESS RECOVERY ACT

Current Location: PCH
Referrals: STBTC/SFC/HTRC

[1] STBTC/SFC-STBTC [3] DP-SFC- DNP-CS/DP [5] PASSED/S (35-3) [3] HTRC-HTRC [7] DP - PASSED/H (51-17) [11] SGND BY GOV (Mar. 3) Ch. 5.

SB 3 PDF  |  SB 3 FIR


Scheduled on - Date:  Time:   Location:

3/30/2021 [1] - Sent to location Senate Committee of the Whole (SCW)
2/23/2021 [7]HTRC - Do Pass - Temporary Calendar House Temporary Calendar (HCAT)
2/11/2021 [3]HINT - Sent to location House Taxation and Revenue (HTRC)
2/10/2021 [3]SFC - Do Not Pass - Committee Substitute Do Pass Senate Calendar (SCal)
2/10/2021 [5]SCAL - Passed the Senate House Introduction (HINT)
2/01/2021 [3]STBTC - Do Pass Senate Finance (SFC)
Synopsis:

 Senate Bill 3 (SB3) changes the name of the Small Business Recovery Act of 2020 to the Small Business Recovery Act. Makes changes in definitions and extends the deadline to apply for a Small Business Recover Loan. Delays the reversion of the Small Business Recovery Loan Fund. SB3 changes the terms of Small Business Recovery Loans (Recovery Loans) and allows recipients to refinance the loan. SB3 increases the amount of the Severance Tax Permanent Fund invested. Declares an emergency.

Analysis:

 Senate Bill 3 (SB3) changes the name of the Small Business Recovery Act of 2020 to the Small Business Recovery Act. SB3 makes changes in definitions and extends the deadline to apply for a Small Business Recover Loan. Delays the reversion of the Small Business Recovery Loan Fund. SB3 changes the terms of Small Business Recovery Loans (Recovery Loans) and allows recipients to refinance the loan. SB3 increases the amount of the Severance Tax Permanent Fund invested. Declares an emergency.

SECTION 1. Amends Section 6-32-1 NMSA 1978 (being Laws 2020 (1st S.S.), Chapter 6, Section 1) to title Chapter 6, Article 32 NMSA 1978 and provides that it may be cited as the Small Business Recovery Act (Act).

SECTION 2. Amends definitions of Section 6-32-2 NMSA 1978 (being Laws 2020 (1st S.S.), Chapter 6, Section 2) as used in the Act as follows:

Definition B is amended to delete references to 2019 and deletes reference to deducting the amount of any loan of the federal Coronavirus Aid, Relief, and Economic Security Act.
Definition G is adjusted for "qualifying small business"  as follows:
G. ‘qualifying small business means a business or nonprofit corporation that: (1) can demonstrate, in a manner provided by the authority, that it has sustained a substantial decline in gross revenue or a substantial disruption to its operations due to the public health orders issued by the secretary of health and related to the coronavirus disease 2019 public health emergency;
2) had an annual net revenue of less $5,000,000 as determined from the business's federal income tax return for taxable year 2019; and
(3) is organized and operated as a nonprofit corporation or is owned as follows: (b) for a corporation, a limited liability company, a business with its principal office and a majority of its full-time employees located in New Mexico; or (c) for a limited partnership, a business with its principal place of business and eighty percent of its assets located in New Mexico;
Definition I provides an expanded definition as follows:
I. ”nonprofit corporation" means an organization that has been granted exemption from the federal income tax by the United States commissioner of internal revenue as an organization described in Section 501(c)(3), 501(c)(6) or 501(c)(8) or as veterans' organizations described in Section 501(c) of the United States Internal Revenue Code of 1986 and subject to the provisions of the Nonprofit Corporation Act.”

SECTION 3.  Amends Section 6-32-3 NMSA 1978 (being Laws 2020 (1st S.S.), Chapter 6, Section 3) to provide that balances remaining in the Small Business Recovery Loan Fund shall revert to the Severance Tax Permanent Fund at the end of Fiscal Year 2024. This section changes the effective date to 2021 and provides that the authority and the state investment council shall develop a funding schedule, as provided for in 7-27-5.15 NMSA 1978.

SECTION 4. Amends Loans Section 6-32-4 NMSA 1978 (being Laws 2020 (1st S.S.), Chapter 6, Section 4) to permit a business that does not have a record of actual losses, but satisfies the requirements of the Act, to apply for a Recovery Loan.
Subsection D provides that the authority shall make Recovery Loans. It increases the loan amount from 200 percent to 300 percent of the qualifying small business's average adjusted monthly business expenses from the previous calendar or fiscal year; inserts the provision provided a business that applies for a loan in calendar year 2021 may use the business's average adjusted monthly business expenses from taxable year 2019; and increases the maximum loan amount from $75,000 to no greater than $150,000.

Subsection D (a)adds additional requirements to the terms of the loan that shall require the loan recipient to use 80 percent of the funds for necessary business expenses, as previously provided and inserts additional use of the funds for making adaptations or improvements to assets, that are necessary due to the coronavirus disease 2019 public health emergency to protect the public health and purchasing or improving any assets for the purpose of developing and growing the qualifying small business's ecommerce production and sales capacity;
(b) deletes the requirement that an officer of the small business certify at the time of the loan that the business does not expect to cease business or file bankruptcy.
(c) provide the authority with ongoing information relevant to the reporting requirements of the authority provided in Section 6-32-7 NMSA 1978;
Subsection D (4) extends the date the application for a loan must be received to no later than December 31, 2022, rather than the current 2020.
Subsection E. The authority may exercise any power provided to the authority in the New Mexico Finance Authority Act to assist in the administration of this; provided that the power is consistent with the provisions of the Act.

SECTION 5. Amends Section 6-32-5 NMSA 1978 (being Laws 2020 (1st S.S.), Chapter 6, Section 5) to extend the initial loan period of Recovery Loans from three years to up to 30 years, as determined by the authority. This section inserts a provision that no interest shall accrue during the first three years of the loan and that when interest begins to accrue and payment of the Recovery Loan shall be due in annual installments. 

SECTION 6. Amends Section 6-32-6 NMSA 1978 (being Laws 2020 (1st S.S.), Chapter 6, Section 6) to read  6-32-6. SMALL BUSINESS TECHNICAL ASSISTANCE--SERVICE PROVIDERS.— to remove “of 2020” from Subsection A(3).

SECTION 7. Amends Section 6-32-7 NMSA 1978 (being Laws 2020 (1st S.S.), Chapter 6, Section 7) to remove “of 2020” throughout.

SECTION 8. Amends Section 7-27-5.15 NMSA 1978 (being Laws 1990, Chapter 126, Section 5, as amended) Subsection G to direct the state investment officer shall make a commitment to the New Mexico finance authority to invest $500,000,000 of the Severance Tax Permanent Fund in investments made pursuant to the Act. This is an increase from $400,000,000. 

SECTION 9. 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. 

SECTION 10. Declares an emergency.

Amendments:

Current Law:Senate Bill ?? (SB ??) makes changes to the Small Business Recovery Act in these sections: Section 6-32-1 NMSA 1978 (being Laws 2020 (1st S.S.), Chapter 6, Section 1); Section 6-32-2 NMSA 1978 (being Laws 2020 (1st S.S.), Chapter 6, Section 2); Section 6-32-3 NMSA 1978 (being Laws 2020 (1st S.S.), Chapter 6, Section 3); Section 6-32-4 NMSA 1978 (being Laws 2020 (1st S.S.), Chapter 6, Section 4); Section 6-32-5 NMSA 1978 (being Laws 2020 (1st S.S.), Chapter 6, Section 5); Section 6-32-6 NMSA 1978 (being Laws 2020 (1st S.S.), Chapter 6, Section 6); Section 6-32-7 NMSA 1978 (being Laws 2020 (1st S.S.), Chapter 6, Section 7); and Section 7-27-5.15 NMSA 1978 (being Laws 1990, Chapter 126, Section 5, as amended).