New Mexico Direct Financial Incentives 2010
New Mexico's economic development, finance and tax organizations provide a range of incentive programs to initiate new business and commercial investment. Specific programs include the Enchantment Land Certified Development Company and New Mexico Community Development Loan Fund.
Area Development Research Desk (Feb/Mar 10)
Industrial revenue bonds (tax-free or taxable):
Cities and counties issue bonds to enable certain companies to purchase land, buildings, equipment and machinery. Property taxes may be exempt, as long as the bonds are outstanding. A lease agreement between the local governing body and the lessee enables the company to take normal depreciation as well as gross receipts compensating tax and a deduction on equipment purchased with bonds.
Job Training Incentive Program:
New Mexico has one of the most aggressive job training programs in the nation. The Job Training Incentive Program provides classroom and on-the-job training, paying from 50 percent to 70 percent (depending on job skill level, pay scale, and geographic location in the state (see below) of employee training costs and wages for an expanding or relocating business for up to six months.
Eligible uses: Customized training is conducted at the business facility or at an educational institution in one of three ways: (1) classroom at public educational institutions; (2) training at the business facility, with hands-on skill development, customized to develop unique skills essential to the business; and (3) on-the-job and/or classroom training.
Rates and terms: Trainee wages are reimbursed to the company at an agreed upon percentage during hours of training, not to exceed 1,040 hours per trainee or 40 hours per week. Instructional cost of classroom training is reimbursed to the educational institution at 100 percent outlined in the training contract. Costs include instructional salaries, fringe benefits, supplies and materials, textbooks, expendable tools and other necessary and reasonable costs associated with conducting training.
Physical location: Wages paid in rural areas are reimbursed at a higher rate (65 percent), as are economically distressed areas or tribal lands (65 percent).
Industry targets: New or expanding businesses that manufacture or produce a product in New Mexico are eligible. Under some circumstances, assistance may be provided to nonretail service sector businesses if at least 60 percent of the company's revenues are derived from outside New Mexico.
Other conditions: Trainees must: be granted full-time employment upon successful completion of training; be of legal working status; have resided in New Mexico for at least one year; not have terminated a public high-school program within the past three months except by graduation; and must be eligible under the Fair Labor Standards Act.
Small business loans:
Acción New Mexico offers loans and training to self-employed individuals in specific communities with limited or no access to traditional business credit. It uses a "stepped lending" model in which clients with small first-time loans and with a strong repayment history may apply for larger loans.
The Enchantment Land Certified Development Company assists existing business start-ups in Cibola, McKinley and San Juan counties. It provides loans in conjunction with private lenders to businesses that hire a majority of employees from low- and moderate-income backgrounds.
The New Mexico Community Development Loan Fund is a financial intermediary providing loans and technical assistance to businesses and organizations that have tangible benefits for loan-income people.
The Small Business Administration (SBA) Loan Program 504 is administered by the Enchantment Land Certified Development Company.
The SBA 504 Program provides long-term, low down-payment loans through a combination of 50 percent bank financing, 40 percent financing from the sale of SBA guaranteed debentures, and 10 percent owner equity. Eligible uses of funds include real estate and fixed asset financing. The interest rate on the bank portion of the loan is fixed or variable at a rate determined to be legal and reasonable, with maturity of at least seven years. The interest rate on the SBA portion is fixed at a rate set in relation to the return on other U.S. government debt instruments with a maturity of at least 10 years.
The New Mexico purchase of SBA, RD, and BIA guaranty obligations is a severance tax permanent fund investment in the U.S. government guaranteed portion of loans for businesses and/or agriculture by financial institutions.
New Mexico business bonds are severance tax permanent fund investments in bonds, notes, debentures or other evidence of indebtedness rated not less than BAA or Bbb. The interest rate is equivalent to the yield on U.S. treasury issues of a comparable term plus 650 to 100 basis points. Maturity is negotiable, though not to exceed 20 years.
Real-property-related business loans are severance tax permanent fund investments in participation of up to 80 percent of loans originated by New Mexico financial institutions. Eligible uses include the purchase of land and attached buildings and refinancing existing debt if the loan is for expansion purposes. Interest rates are fixed for five years, and maturity is not less than five years or more than 15 years.
"27J" provides an exemption from certain regulatory requirements for small businesses attempting to raise funds on the capital marketplace. It is limited to New Mexico corporations or limited partnerships with their principal office and a majority of employees located in the state. The maximum offering is $1.5 million to an unlimited number of offerees or purchasers.
Venture capital investments are severance tax permanent fund investments in qualified venture capital funds. The funds may be invested in entrepreneurial businesses in the state.
The Film Investment Program provides up to $7.5 million that can be invested in a New Mexico film private equity fund or a New Mexico film project. An equity investment can be up to two thirds of estimated total production costs; a guaranteed debt investment can be up to 100 percent of estimated total production costs.
New Mexico State Contact:
New Mexico Economic Development Partnership
851 University Boulevard S.E., Suite 200
Albuquerque, NM 87106
Incentive and tax information is provided to Area Development by each state's economic development or commerce agency for information purposes only and is subject to revision at any time by the state government. Please contact the state agency directly for full requirements and offerings.