The Bottom LineThe Bottom Line

A New Mexican CDFI’s Formula for Lending Is Paying Off

The New Mexico Community Loan Fund was founded in the late 1980s as a Christian response to economic inequities. More than three decades later, it's still helping its low- and moderate-income communities achieve their entreneurship dreams.

A neighborhood in Albuquerque, New Mexico

A neighborhood in Albuquerque, New Mexico. (Photo by Raychel Sanner / Unsplash)

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This story was co-published with El Paso Matters as part of our joint Equitable Cities Reporting Fellowship For Borderland Narratives.

In Albuquerque, Estevan Hernandez wanted to start an urban farm and commercially grow mushrooms. In Las Cruces, struggling trucker Gabriel Ortiz needed to buy a second 18-wheeler to expand his business.

There are many dreams in the Land of Enchantment. The New Mexico Community Loan Fund, a nonprofit community lending in New Mexico doing business as the Loan Fund, has helped Hernandez, Ortiz, and hundreds of New Mexicans achieve their goals by lending capital to small and startup companies.

The fund was started in 1989, based on a recommendation from a 1987 task force, the New Mexico Conference of Churches, created to address the state’s systematic poverty problem. At the time, New Mexico was ranked number one nationally in poverty.

As the conference examined the issues affecting the state, a task force concluded that “entrepreneurship and self-employment opportunities with an increase in business loans was a way to help low and moderate-income communities,” says Juan Albert, the nonprofit’s technical advisor.

The loan fund made its first six loans in 1990. Since then, the fund has made more than $108 million in loans and helped create 11,500 jobs in the state, according to their site.

“We make loans between $5,000 and $1 million,” says Albert, who joined the CDFI as a loan officer and technical advisor after years of consulting in 35 countries, 25 of which were in Latin America. “Fifty percent of our borrowers are minorities, and 45% are women. We’ve generated over $100 million in revenue.”

It’s now one of 11 initiatives in the state designated by the U.S. Treasury Department as a community development financial institution, or CDFI, for its work delivering financial services to low-income communities and people lacking access to financing. It gets funds from Small Business Investment Company and the Federal Deposit Insurance Corporation.

Getting a loan from the fund is more accessible than getting it from a regular bank. As Albert says, they focus on factors other than a credit score. All loans require collateral — and character.

“We look at the nature of the business,” he said. “We work a lot with startups. We look at how long you’ve been in the business. We look at character. We want to make sure they’re a good person.”

The Loan Fund’s lending philosophy emphasizes checking in with clients periodically to ensure the business is going well, while also helping with marketing, logistics and technical support. That, they say, is the key to their success.

“We sit with them, and we analyze the business and try to help them,” Albert says. “I personally have about 50 clients, and I am with them at least once a month. We have a very low default rate simply because we work with our clients.”

Ortiz became a truck driver after being laid off from a security company. With the help of his unemployment benefits, he trained to follow in his grandfather’s footsteps and obtained a commercial driver’s license. He worked for other companies until 2015 when he became an owner-operator.

To get his first truck, Ortiz had to refinance his house. Later, his local bank turned him down when he wanted to get a second truck. So he contacted the CDFI, where Albert worked to provide him with a line of credit he could use for any repairs or expansion for his business.

“These programs are great for us small companies because no one wants to take a risk with us,” Ortiz says. “If I hadn’t met them, I would still have only one truck, or I would’ve closed.”

The process to apply for and receive funding, Ortiz says, was easy due to Albert’s help and guidance throughout the process.

New Mexico Fungi is based in Albuquerque.

“He goes the extra mile to help you,” Ortiz says, recalling the first time he met Albert, who took him for breakfast at a local chain restaurant. “He is a great guy.”

Without access to the line of credit, he says, his business would’ve closed already.

Three hours away in Albuquerque, another client is also thriving as a small business owner thanks to The Loan Fund’s program.

About 12 years ago, Hernandez started experimenting and learning about urban farming. His move to a vegan diet soon sent him on a quest to find alternative protein sources, and he found them in growing gourmet mushrooms through his love of mycology.

Like Ortiz, Hernandez was denied by his local bank, who told him a startup was a risky business they would not fund. Hernandez found the CDFI and applied.

“I put my application through, and they were pretty quick to respond and get back to me,” he said. “They’ve definitely let me know that it helps to have everything organized and pre-planned ahead of time.”

Hernandez approached the CDFI in 2021 when he was ready to start farming commercially. He had prepared for the plunge into business as he already had a business plan, sales projections and lineups of suppliers. His diligence streamlined the process of receiving $20,000 to start his business.

“They provided the initial funding for us to purchase all of our equipment and supplies,” says Hernandez. “They’ve also offered a lot of assistance with search engine optimization to help on the digital forefront. They really helped a lot with the digital aspect of our business.”

Now Hernandez works out of a 2,000-square-foot warehouse in the heart of Albuquerque. His business, New Mexico Fungi, cultivates about 150-170 lbs of mushrooms monthly. The harvest is sold on their digital store, at local farmer’s markets, and to restaurants in the area.

“In commercial cultivation, it’s all about scheduling and planning,” says Hernandez. “I spend a lot of my time preplanning my harvest and setting my team into action. We are looking to expand to a bigger space, about twice our size.”

Without the fund’s help, Hernandez said he would not be able to be thinking how to double the size of his grow operation. “It would have been a very, very slow building process,” he says. “I probably wouldn’t have started in a commercial space if I didn’t have that funding.”

During the five years that Albert has worked with the fund, he says he’s seen countless success stories that made him proud of the CDFI’s impact — whether it was helping his clients get through the COVID-19 pandemic with deferment loans or being able to fund companies that might not be able to get the fund from somewhere else.

“We’re in the business of helping people fulfill their dreams,” he says. “Whether it be the trucker who came to me thinking he would never get a loan for a second, third, or fourth truck – or the young lady who never had a business, and we lent her $50,000, and she’s now doing close to half a million dollars in sales.”

This article is part of The Bottom Line, a series exploring scalable solutions for problems related to affordability, inclusive economic growth and access to capital. Click here to subscribe to our Bottom Line newsletter.

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Christian De Jesus Betancourt is Next City and El Paso Matters' joint Equitable Cities Reporting Fellow for Borderland Narratives. He has been a local news reporter since 2012, having worked at the Temple Daily Telegram, Duncan Banner, Lovington Leader and Hobbs News-Sun. He's also worked as a freelance reporter, photographer, restaurant owner and chef. Born and raised in Juarez, El Paso became Betancourt’s home when he moved there in the seventh grade. 

Tags: new mexicocdfi

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