CDA: Lifting of loan moratorium dim
CDA executive director Manuel Sablan and loan manager Oscar Camacho made it clear during Friday’s meeting of the development corporation division that they will not endorse lifting the moratorium until the new Small Business Credit Initiative Program is up and running.
The new program is funded by $13 million made available by the U.S. Treasury. Businesses that might be affected by the CDA moratorium on new loans have the option to apply with the SBCI program, which has already made available over $4 million to CNMI borrowers.
The management team received support from board member Marcie Tomokane, who is convinced that lifting the moratorium will jeopardize the SBCI program, which CDA and the Department of Commerce are actively pushing. She suggested keeping the moratorium until the new program becomes successful.
She disclosed that CDA also has limited reserves to accommodate new loans if the moratorium is lifted.
CDA implemented the moratorium on new loans in March this year so it could build its cash reserves and to give way to the SBCI program. The moratorium is indefinite.
Board member Diego Songao argued that it would be unfair for borrowers to be refused a CDA loan just because of the new program, which he said has not been in operating in the past six months anyway.
CDA is not even legally required to build up a reserve or backup funds for the new SBCI program, he added.
Songao wants to open up the loan program to help businesses that are struggling due to the economic slowdown.
His comments were countered by Tomakane and Sablan, who provided updates on the status of the new program. They said that, as far as CDA is concerned, the SBCI program is ongoing and has been in contact with participating banks.
According to loan manager Oscar Camacho, lifting the moratorium will also indicate that the CNMI is not serious about the new program.
CDA comptroller Danny Militante reported to the board Friday that the agency has $1.6 million in its account but pointed out that close to $1.3 million has already been obligated, resulting in only $316,000 in available funds.
Militante said the $1.3 million obligated funds include $1 million for the Northern Marianas Housing Corp. and $268,000 for KKMP. He said the agency is also expecting $800,000 from foreclosed properties but pointed out that this is not cash because many of these properties were acquired by lease and involve long-term periods.
The board put off making any decision on the moratorium pending a presentation to the board about the SBCI program, as ordered by board chair Tom Glenn Quitugua.
By Moneth Deposa