New Mexico lowers cap in interest rates for storefront loans
SANTA FE, N.M. (AP) — Gov. Michelle Lujan Grisham has signed legislation aimed at underwriting loans to local start-up companies with taxpayer dollars and a consumer protection bill that lowers the maximum interest rate on storefront installment loans of $10,000 or less.
The governor on Tuesday signed legislation that allows the state to dedicate $50 million to future investments in New Mexico-based venture capital projects that can be risky for investors but have the potential for above-average returns.
The bill from Democratic legislators including Reps. Javier Martínez of Albuquerque and Linda Serrato of Santa Fe responds to concerns about the New Mexico’s ability to retain and attract businesses in early stages of development.
The governor also signed legislation that lowers the maximum interest rate on storefront loans from to 36%, down from 175%, with some exceptions for loans of $500 or less.
The bill from legislators including Democratic Rep. Susan Herrera of Embudo also doubles the maximum size of storefront installment loans to $10,000.
Supporters say new restrictions are needed to ensure borrowers don’t fall into vicious cycles of debt that contribute to poverty in New Mexico. The new loan restrictions take effect Jan. 1, 2023.
Lujan Grisham, a Democrat seeking reelection in November, has until March 9 to sign legislation including a proposed $8.5 billion state general fund spending plan for the fiscal year starting July 1. Leftover bills are automatically vetoed.