Gov. Michelle Lujan Grisham signed legislation Tuesday that will offer $400 million in low-interest loans to small businesses and nonprofits in New Mexico that have endured economic damage as a result of the new coronavirus pandemic.

The Small Business Recovery Act of 2020 draws the money from the state’s $5 billion Severance Tax Permanent Fund to offer the business loans in addition to another $50 million in loans for local governments that also have seen significant revenue losses as a result of COVID-19.

“Small businesses are the backbone of New Mexico’s economy and the lifeblood of our communities,” Lujan Grisham said in a statement Tuesday. “They’ve suffered greatly from this unprecedented pandemic emergency, and our state and our economy suffer with them. I will fight for small businesses and their recovery every single day and this measure, putting our state’s wealth to work in getting them back on their feet, is a significant step in the right direction.”

The loans are limited to businesses and nonprofits that made an annual gross revenue of less than $5 million in 2019 and saw income decline by 30 percent in April or May.

The new law will also temporarily pause employer contributions to the state’s unemployment compensation trust fund until December 31, 2021. This ends employer increases to the fund that were scheduled to take place next year, according to the Governor’s Office.