CDA moves to leverage limited funds

The Commonwealth Development Authority starts exploring ways to leverage its limited funding to satisfy the Northern Marianas’ craving for increased business activities due to the closure of over 2,000 establishments in the last three years.

Executive Director Marylou S. Ada said CDA has intensified efforts to increase the available funds that may be used to improve the agency’s speculative capacity and increase the rate of return from possible investments by clients.

“CDA continues to seek ways of leveraging its limited funds to increase opportunities for new and existing businesses to pursue other business ventures,” according to Ms. Ada.

Ms. Ada said the agency is currently faced with depleting funds due to the increasing number of loan applicants which necessitated that it lay the ground work for expansion of its risks through partnership agreements with federal agencies.

She disclosed the CNMI government controlled lending agency’s portfolio is slowly getting saturated which may soon not able to accommodate all qualified loan applications for start-up capital or supplemental funding.

Ms. Ada said the development authority is exploring other possible ways to bring in fresh money into the Northern Marianas economy through the expansion of CDA’s risks by entering into cooperative agreements with other U.S. lending offices.

At present, CDA is looking at signing an agreement with an affiliate agency of the U.S. agriculture department — the Rural Development Program –to provide CNMI businesses new loan packages.

Ms. Ada said CDA is holding initial discussions with the Rural Development Program to bring Business and Industry Loan packages into the CNMI to expand the agency’s lending base amid economic contraction and stock-piling applications for fresh capital.

With the Business and Industry Loan Program, businesses can obtain new loans from the Rural Development through credit packages guaranteed by the development authority.

A Memorandum of Understanding which will pave the road for the bringing in of the program to the Northern Marianas is already in the works, according to Ms. Ada.

Under the proposed loan program, CDA will guarantee at least two-thirds of the total amount of credit obtained from private financing companies like commercial banks.

Rural Development will come in to settle the loan with the bank when it turns sour. CDA will then reimburse the amount incurred by the Rural Development in settling the account with the private financing company.

Ms. Ada said CDA will soon enter into partnerships with private banking institutions identified by the Small Business Administration to kick off the Business and Industry Loan Program.

Later last year, CDA launched the Microloan Program in partnership with SBA to help small businesses cope with economic difficulties through loan packages of up to $25,000.