NM’s Microlenders and Incubators Flourished in 2010

December 31, 2010 | Reprinted with permission of the New Mexico Business Weekly Copyright 2010; by Megan Kamerick, NMBW Senior Reporter

Nonprofits continued to struggle with the economy, especially those in the human services sector facing more government cuts.

Many rely on the federal Medicaid waiver program, and watched it anxiously this year to gauge how bad future cuts would be. A study by the Urban Institute found that it was an anxiety echoed around the nation, as many organizations were forced to freeze or reduce salaries, draw on reserves or scale back operations.

Gov. Bill Richardson has tried to plug some of the holes with stimulus funds, but those were temporary fixes.

The cuts are forcing many nonprofits to curtail services, and evaluate what their core missions are in order to salvage scarce resources. Many are trying to diversify their donor pools and funding streams, and collaborate.

But others, such as nonprofit microlenders and small business incubators, grew, perhaps tapping a desire for entrepreneurship among those who lost steady jobs. They also didn’t have piles of bad loans restricting their ability to lend.

The Loan Fund became the newest of the Small Business Administration’s micro lenders in New Mexico. It was awarded $750,000 from the SBA for micro-lending activities. The Loan Fund also has exceeded $40 million in cumulative lending since it launched in 1990. That helped create or preserve 6,000 jobs, according to the nonprofit. This year, it awarded more than $5.6 million, and received $3.4 million for new lending, and $930,000 in grants for technical assistance.

ACCIÓN New Mexico • Arizona • Colorado reached a lending milestone this year, with $30 million in cumulative loans. And the nonprofit moved into new regional headquarters. The move was funded through the U.S. Economic Development Administration and private sources, which provided $300,000 in in-kind support.

ACCIÓN also reached another milestone, serving its 3,000th client since launching in 1994.

WESST gave out 48 loans totaling $727,000 in 2010. The nonprofit received a federal grant for about $120,000 to continue providing entrepreneurial services at its small business incubator, the WESST Enterprise Center. By the end of 2009, the Enterprise Center had created 55 jobs and had 10 member companies, with total revenue of $5.5 million and a total payroll of $2.6 million. In the first six months of 2010, it created about 35 jobs, said Wally Drangmeister, spokesman for WESST.

Many incubators won’t have full year-end numbers for several months, but at the Santa Fe Business Incubator, there are clear signs the economy is looking less gloomy, said Sheila Stalder, incubator program manager. The facility added four new clients in the last quarter, she said.

Three more clients joined the incubator’s “co-working” space, a new concept it launched recently for entrepreneurs who might not be ready for their own office, but need to get out of the house. Clients share a room with others and have access to services such as free Wi-Fi and assistance from staff. The nonprofit Santa Fe Incubator added 24 jobs, on top of the 59 it had at the end of September, Stalder said.

“I get the feeling that people are starting to be a little more hopeful about the economy, even if they’re not seeing that many changes,” she said. “We see folks who are willing to take a chance and start up a business again. We’re pretty close to being full, and they’re almost all technology companies.”

At the South Valley Economic Development Center, an incubator in Albuquerque, there are 52 clients using the commercial kitchen and 12 office clients, said Tim Nisly, chief operating officer. The most current job numbers are from April, and those indicated there were 249 jobs at those client companies.

A study by New Mexico State University found that the six nonprofit incubators around the state represented a total of 96 companies with 337 full-time and 100 part-time employees, earning total wages of about $15.8 million.

Total 2009 revenue for the companies was about $19.2 million.