CDA asks $500K more from SBA

The Commonwealth Development Authority will seek additional funding from the Guam-based United States Small Business Administration to sustain the demand for small- and medium-scale business loans under its Microloan Program.

Board Chairman John S. Tenorio said CDA would be asking SBA for at least $500,000 in additional funds to meet the need for start-up and expansion capital by Northern Marianas entrepreneurs.

Mr. Tenorio said at least 11 small-scale businessmen obtained fresh capital from the Microloan Program instituted by the development authority through a seed fund obtained from the Small Business Administration.

The Microloan Program was launched late last year to help stimulate the Commonwealth’s slumping economy by assisting small businessmen obtain fresh and additional capital for either new or existing businesses.

The Microloan Program, a partnership between CDA and the SBA, was established to help small businesses cope with economic difficulties. SBA loaned some $330,000 to CDA for the program.

Under the program, small businesses can obtain as much as $25,000 in fresh loans. CDA is the first microlender in the Western Pacific although talks are already underway for the SBA to extend the program in other Micronesian islands.

Still within its first year, loan application of close to 15 small businessmen involving more than $300,000 have already been approved and Mr. Tenorio said CDA has already been flooded with numerous applications which warrant the need for additional funding from SBA.

Application for credit under the Microloan Program are concentrated on the service-type investments, majority of which are existing businesses needing additional funding or capital.

However, CDA has been sitting with applicants for business counseling where government experts provide entrepreneurs inputs regarding which business types are likely to prosper especially during these times of economic hardships.

“We spend more time with the applicants before we approve the loan. We sit down with them, informing them about other options they can explore or where they can possibly put their money in,” he added.

The Microloan Program is expected to offshoot the slowdown in lending activities undertaken by private commercial banks due to economic downturn which virtually dampened capabilities by borrowers to repay loans.

CDA is the only government agency which grants all types of loans to local residents of the Northern Marianas at interest rates lower than what are offered by commercial financial institutions.