Marquita Russell, chief executive officer of the New Mexico Finance Authority, told the Finance Authority oversight committee on July 1 that the Small Business Recovery Loan Fund — created by the 2020 Small Business Recovery Act and expanded in 2021 — has a long repayment timeline and a high share of loans currently past due. The authority transferred loan servicing to Lendistry this fiscal year and said the contractor will prioritize technical assistance for delinquent borrowers.

The Small Business Recovery Act established flexible, low‑interest loans to help businesses that experienced sharp revenue declines early in the COVID‑19 pandemic. Russell said the program opened in August 2020 and accepted applications through Dec. 31, 2020; the legislature expanded eligibility, doubled the maximum loan from $75,000 to $150,000 and extended application authority through Dec. 31, 2022. “We accepted applications from that initial June period … and we made our first loan in August 2020,” Russell said.

Why it matters: the program was designed as a pandemic lifeline and was capitalized from the State Investment Council’s severance tax permanent fund; repayments flow back to that fund. Because many loan terms deferred principal and interest for multiple years, a large share of first payments only began arriving in 2024–2025, creating a concentrated servicing and collection workload now.

Key facts and figures: Russell said the combined SBRL portfolio financed 2,552 businesses across 32 counties, in 21 economic sectors, with an average loan of about $67,000. About 265 borrowers have paid loans in full; 23 loans were written off (either discharged in bankruptcy or verified owner deaths), and 11 borrowers were in active bankruptcy proceedings at the time of the report. “Of the total outstanding principal as of June 30 is, dollars 146,000,000,” Russell said. She reported roughly 40% of loans were more than 180 days past due and roughly 10% were more than 15 days but under 180 days past due; current loans represented about $70 million of outstanding principal while past‑due loans represented about $76.1 million.

Loan terms and borrower profile: Russell described very flexible statutory underwriting: unsecured loans, no collateral required up to the statutory cap; the second program required a personal guarantee on the second $75,000 of a $150,000 loan. Interest was fixed at half the prime rate; when enacted in 2020 that equated to about 1.625% and later rose to about 3.5–3.75% as prime increased. Eligibility was based on demonstrable revenue declines from pre‑pandemic levels; applicants had to be operating during the pandemic and could not have had delinquent taxes prior to the pandemic.

Delinquencies, bankruptcies and collection strategy: Russell said a sevenfold increase in bankruptcy filings under the program was observed between 2023 and 2024, and that many small businesses simply stopped operating without filing bankruptcy. “We do monitor the bankruptcy proceedings,” she said, “we file with the courts to make sure that we maintain whatever claim and the right we have. But we can't really collect while they're in bankruptcy.” Russell added that annual payment schedules made it harder to keep borrowers engaged until the conversion to monthly servicing.

Servicing transfer and technical assistance: to address collections and improve borrower outcomes, the Finance Authority selected Lendistry — a Community Development Financial Institution (CDFI) — to manage loan servicing and client support, and completed the portfolio transfer in fiscal year 2025. Russell said Lendistry was chosen in part because it bundled technical assistance with collection efforts and operates a learning platform and advising services. “They were the only ones who included technical assistance as part of their collection efforts,” Russell said. Technical assistance offerings include one‑on‑one advising, webinars, financial forecasting tools and bilingual resources; Russell said Lendistry will prioritize borrowers who are behind in payments and begin enhanced outreach and intake in September.

What the committee asked and next steps: lawmakers pressed for sector breakdowns of bankruptcies and closures (Representative Kates and others asked whether hospitality or restaurants were disproportionately affected). Russell said the authority has sector codes and will report further once Lendistry completes client intakes and assessment; she noted that many restaurants were represented in the portfolio but that the authority lacks reliable post‑loan operating data except where legal filing or verifiable reports exist. The authority said it will continue to report to the committee as Lendistry delivers portfolio assessments and updated performance metrics.

Ending: Russell and lawmakers framed the portfolio's challenges as partly structural — long payment deferrals and annual schedules — and partly market driven, with some borrower industries still operating below pre‑pandemic levels. The authority will continue monthly monitoring, courts filings when appropriate and prioritized technical assistance through Lendistry as the primary strategy to improve recovery rates.