The Commonwealth Development Authority expects that a loan application they received will serve as a “test run” for the long-awaited launch of the State Small Business Credit Initiative in the CNMI.
Loan manager Oscar Camacho said in an interview that the agency has received one application for SSBCI, a program that provides federal funding to states and territories to strengthen programs that support private lending to small businesses and manufacturers.
The CNMI Department of Commerce, the responsible agency for SSBCI, has already received $4.35 million out of the available $13 million in program funding.
CDA is the implementing agency for the two approved SSBCI programs in the Northern Marianas: the loan purchase participation program and the collateral support program.
Camacho said the “small” loan application, which amounts to under $50,000, is for the loan purchase participation program, which enables companies to acquire necessary financing that might be unavailable otherwise due to a cash flow shortage according to the lender's analysis.
“What this means is the program can purchase up to 40 percent of the loan to induce the bank, which I think is the reason why the bank is extending the loan,” he told Saipan Tribune.
Camacho declined to give further details about the loan application but said that they have forwarded about two weeks ago all documentation to the Michigan Economic Development Corp., which will serve as CDA's third-party loan underwriter.
He said they are still waiting to get a response on the loan application from MEDC, which has yet to finalize a contract with CDA.
“With the loan application, I hope it will push them to get the contract done because there are SSBCI applicants waiting,” said Camacho.
He added that he is in the process of filing his SSBCI quarterly report for the fourth quarter of 2012.