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$2M now available for loans at CDA
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Posted on Jun 07 2005
More accounts have been freed up in the Commonwealth Development Authority’s $7-million cash in the bank, enabling the agency to loan out as much as $2 million to borrowers.
CDA initially announced that it had $1 million available for lending.
But yesterday, outgoing CDA chair Sixto Igisomar said the amount of available funds was now at $2 million.
This, he added, could still increase by $500,000 or $1 million, depending on the outcome of CDA’s loan application with the U.S. Department of Agriculture-Rural Development.
Igisomar explained that aside from the $2 million, CDA has an extra $500,000 reserved for the USDA-RD loan application.
“Based on initial negotiations, I think we will need that $500,000 to get a $1-million loan from USDA-RD, at an interest as low as 1 percent. If USDA-RD approves, we will use the money to issue small business loans. That way, we can generate interest and make some income for CDA operations,” said Igisomar.
But if the USDA-RD does not go through, the $500,000 reserve will nevertheless be made available to borrowers.
Last month, the CDA board of directors lifted a five-year moratorium on direct loans.
Accordingly, CDA started receiving applications for new loans starting June 1, 2005.
Half of the funds available for lending are allocated to commercial loans over $25,000, while another 30 percent was budgeted for commercial loans amounting to $25,000 and under.
The remaining funds are being put aside for marine and agricultural loans.
The new loans will be charged lower interest rates, which the CDA board adopted simultaneously with the lifting of the moratorium.
The interest rate for commercial loans was reduced from 9 percent to 7 percent, while that for fishing and farming loans was lowered from 5 percent to 4.5 percent.
Igisomar said the rate reduction was made possible by the moratorium lifting, which is expected to infuse new income into the agency.
“CDA clients with currently higher interest rates are encouraged to come in to find out if or how they can qualify for a lower interest rate,” CDA said.
