1. A. A person shall not engage in the business of lending in amounts of ten thousand dollars ($10,000) or less for a loan without first having obtained a license from the director. Nothing contained in this subsection shall restrict or prohibit a licensee under the New Mexico Small Loan Act of 1955 from making loans in any amount under the New Mexico Bank Installment Loan Act of 1959 [Chapter 58, Article 7 NMSA 1978] in accordance with the provisions of Section 58-7-2 NMSA 1978.
2. B. Nothing in the New Mexico Small Loan Act of 1955 shall apply to a person making individual advances of ten thousand dollars ($10,000) or less under a written agreement providing for a total loan or line of credit in excess of ten thousand dollars ($10,000).
3. C. A banking corporation, savings and loan association or credit union operating under the laws of the United States or of a state shall be exempt from the licensing requirements of the New Mexico Small Loan Act of 1955, nor shall that act apply to business transacted by any person under the authority of and as permitted by any such law nor to any bona fide pawnbroking business transacted under a pawnbroker's license nor to bona fide commercial loans made to dealers upon personal property held for resale. Nothing contained in the New Mexico Small Loan Act of 1955 shall be construed as abridging the rights of any of those exempted from the operations of that act from contracting for or receiving interest or charges not in violation of an existing applicable statute of this state.

4. D. The provisions of Subsection A of this section apply to:

   1. (1) a person who owns an interest, legal or equitable, in the business or profits of a licensee and whose name does not specifically appear on the face of the license, except a stockholder in a corporate licensee;

   2. (2) a person who seeks to evade its application by any device, subterfuge or pretense whatsoever, including but not thereby limiting the generality of the foregoing:

      1. (a) the loan, forbearance, use or sale of credit (as guarantor, surety, endorser, comaker or otherwise), money, goods or things in action;
      2. (b) the use of collateral or related sales or purchases of goods or services or agreements to sell or purchase, whether real or pretended;
      3. (c) receiving or charging compensation for goods or services, whether or not sold, delivered or provided;
      4. (d) the real or pretended negotiation, arrangement or procurement of a loan through any use or activity of a third person, whether real or fictitious;
      5. (e) making loans disguised as a personal property sale and leaseback transaction;
      6. (f) disguising loan proceeds as a cash rebate for the pretextual installment sale of goods or services; and
      7. (g) making, offering, assisting or arranging a debtor to obtain a loan with a greater rate of interest, consideration or charge than is permitted by Chapter 58 NMSA 1978 through any method, including mail, telephone, internet or any electronic means, regardless of whether the person has a physical location in the state; and

   3. (3) if the loan exceeds the rate permitted by Chapter 58 NMSA 1978, a person purporting to act as an agent, service provider or in another capacity for another entity that is exempt from the New Mexico Small Loan Act of 1955, if, among other things:

      1. (a) the person holds, acquires or maintains, directly or indirectly, the predominant economic interest in the loan;
      2. (b) the person markets, brokers, arranges or facilitates the loan and holds the right, requirement or first right of refusal to purchase loans, receivables or interests in the loans; or
      3. (c) the totality of the circumstances indicate that the person is the lender and the transaction is structured to evade the requirements of the New Mexico Small Loan Act of 1955. In deciding whether the totality of the circumstances indicate that the person is a lender and a transaction is structured to evade the requirements of the New Mexico Small Loan Act of 1955, all relevant factors may be considered, including where the person: 1) indemnifies, insures or protects an exempt entity for any costs or risks related to the loan; 2) predominantly designs, controls or operates the loan program; or 3) purports to act as an agent, service provider or in another capacity for an exempt entity while acting directly as a lender in other states.
5. E. A person, copartnership, trust or a trustee or beneficiary thereof or an association or corporation or a member, officer, director, agent or employee thereof who violates or participates in the violation of a provision of Subsection A of this section is guilty of a petty misdemeanor and upon conviction shall be sentenced pursuant to the provisions of Subsection B of Section 31-19-1 NMSA 1978. A contract or loan in the making or collection of which an act is done that violates Subsection A or D of this section or Section 58-15-17 or 58-15-20 NMSA 1978 is void and the lender has no right to collect, receive or retain any principal, interest or charges whatsoever.
6. F. A loan in an amount equal to ten thousand dollars ($10,000) or less shall be made only pursuant to the New Mexico Bank Installment Loan Act of 1959 or the New Mexico Small Loan Act of 1955.
7. G. A violation of a provision of the New Mexico Small Loan Act of 1955 that constitutes either an unfair or deceptive trade practice or an unconscionable trade practice pursuant to Section 57-12-2 NMSA 1978 is actionable pursuant to the Unfair Practices Act.

History: 1953 Comp., § 48-17-32, enacted by Laws 1955, ch. 128, § 3; 1973, ch. 18, § 1; 1977, ch. 245, § 61; 1983, ch. 95, § 1; 1987, ch. 127, § 1; 1993, ch. 210, § 4; 2007, ch. 86, § 3; 2017, ch. 110, § 12; 2019, ch. 201, § 9; 2022, ch. 23, § 6.

ANNOTATIONS

The 2022 amendment, effective January 1, 2023, revised certain applicability provisions of the New Mexico Small Loan Act of 1955; in Subsection A, after "lending in amounts of", deleted "five thousand dollars ($5,000)" and added "ten thousand dollars ($10,000)"; in Subsection B, after "individual advances of", deleted "five thousand dollars ($5,000)" and added "ten thousand dollars ($10,000)", and after "in excess of", deleted "five thousand dollars ($5,000)" and added "ten thousand dollars ($10,000)"; in Subsection D, Paragraph D(2), added Subparagraphs D(2)(e) through D(2)(g), and added Paragraph D(3); and in Subsection F, after "an amount equal to", deleted "five thousand dollars ($5,000)" and added "ten thousand dollars ($10,000)".

The 2019 amendment, effective January 1, 2020, provided penalties for violations of the certain provisions of the New Mexico Small Loan Act of 1955, and provided that certain violations of the New Mexico Small Loan Act of 1955 are also actionable pursuant to the Unfair Practices Act; in Subsection E, after "of this section", added "or Section 58-15-17 or 58-15-20 NMSA 1978"; and in Subsection G, after "1955", deleted "which violation consists of a false or misleading oral or written representation of any kind knowingly made in the extension of credit that may, tends to or does deceive or mislead any person to whom the extension of credit is made" and added "that", after "constitutes", added "either", after "trade practice", added "or an unconscionable trade practice pursuant to Section 57-12-2 NMSA 1978 is actionable".

Applicability. — Laws 2019, ch. 201, § 17 provided that the provisions of this act apply to loans subject to the New Mexico Small Loan Act of 1955 and the New Mexico Bank Installment Loan Act of 1959 that are executed on or after January 1, 2020.

The 2017 amendment, effective January 1, 2018, revised certain criteria requiring persons who are engaged in the business of lending to obtain a license from the director of the financial institutions division of the regulation and licensing department, revised the amount of certain loans that are exempt from the provisions of the New Mexico Small Loan Act of 1955, provided that loans in the amount of five thousand dollars ($5,000) or less shall be made only pursuant to the New Mexico Bank Installment Loan Act of 1959 or the New Mexico Small Loan Act of 1955, and provided that certain violations of the provisions of the New Mexico Small Loan Act of 1955 constitute unfair or deceptive trade practices pursuant to the Unfair Practices Act; in Subsections A and B, changed "two thousand five hundred dollars ($2,500)" to "five thousand dollars ($5,000)"; and added Subsections F and G.

The 2007 amendment, effective November 1, 2007, amended Subsection B to delete the former condition that loan contracts with a line of credit in excess of $2,500 be secured by a pledge of real estate.

Severability clause. — Laws 2007, ch. 86, § 23 provided that if any part or application of the act is held invalid, the remainder or its application to other situations or persons shall not be affected.

The 1993 amendment, effective June 18, 1993, in Subsection E, substituted the language following "Subsection A of this section" in the first sentence for "is guilty of a misdemeanor and upon conviction shall be punishable by a fine of not less than one hundred dollars ($100) and not more than three hundred dollars ($300) or by imprisonment of not more than ninety days or by both fine and imprisonment" and made a stylistic change.

Generally. — Fact that one was licensed as a small loan operator under Laws 1947, ch. 174 (now repealed), did not preclude it from making loans for more than $500, provided it did not charge more than 10% interest per annum. Spain Mgmt. Co. v. Packs' Auto Sales, 1950-NMSC-001, 54 N.M. 64, 213 P.2d 433.

Acts constituting "engaging in the business" of lending. — Occasional isolated acts of loaning money to accommodate one's customers and friends do not constitute "engaging in the business" of loaning money; yet one act can be sufficient to support a finding that one was engaged in business. Hammond v. Reeves, 1976-NMCA-069, 89 N.M. 389, 552 P.2d 1237.

Where the lender made a relatively small number of loans and had another business from which he presumably obtained the majority of his income, it cannot be said that the trial court erred in the conclusion that he was not engaged in the business of lending. Hammond v. Reeves, 1976-NMCA-069, 89 N.M. 389, 552 P.2d 1237.

Business establishments dealing with Indians not exempt. — Business establishments, not specially licensed as pawnbrokers, located outside of Indian reservations which charged in excess of 12% per annum when loaning money or extending credit to Indians are not exempt from the provisions of the Small Loan Act. 1970 Op. Att'y Gen. No. 70-60.

Am. Jur. 2d, A.L.R. and C.J.S. references. — 53A Am. Jur. 2d Money Lenders and Pawnbrokers §§ 14 et seq., 24, 25.

58 C.J.S. Money Lenders § 4.