CDA loan applications spike

Local businesses are rushing to apply for loans with the Commonwealth Development Authority, following the May lifting of the five-year moratorium on direct loans.

CDA loan officer Greg Calvo disclosed yesterday that the authority has received 15 loan applications since the moratorium’s lifting, while many others have expressed interest in availing of the government’s loan program.

“Fifteen is a pretty high number, especially if you consider the amounts that the applicants are requesting. The applications range between $25,000 and half a million dollars,” Calvo said.

He added that most applicants are asking for commercial loans, which they intend to use for a retail business or large commercial construction, among other things.

“Mostly, people are applying for working capital. Because of the sluggish economy, people need funds for their payroll and administrative expenses, for advertising to get their product or service more known in the community, or for the purchase of new inventory,” said Calvo.

CDA is expecting the number of applications to rise as local residents become more knowledgeable about loan requirements and procedures.

Calvo said he is tentatively set to visit Tinian and Rota on the first week of August to conduct an information dissemination campaign on CDA’s loan process.

Asked about funds availability, Calvo assured applicants that CDA had enough money to lend them, even if all the 15 pending applications were approved.

CDA earlier announced that the agency had $2 million available for qualified borrowers.

Yesterday, CDA chair Tom Glenn Quitugua said more funds may become available depending on CDA collections.

The CDA board of directors lifted a five-year moratorium on direct loans in May 2005. Accordingly, the authority started receiving applications for new loans starting June 1.

Half of the funds available for lending are allocated to commercial loans over $25,000, while another 30 percent are budgeted for commercial loans amounting $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.

According to CDA, the rate reduction was made possible by the moratorium lifting, which is expected to infuse new income into the agency.