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CDA debt collection declines
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Posted on Oct 27 1999
As a result of its refinancing and loan payment extension program, the Commonwealth Development Authority’s debt collection has declined 50 percent to $400,000 every month since 1998.
Sixty-five percent of the 300 businesses that have borrowed money from CDA have been severely affected by the lingering economic slowdown, according to CDA Board Chairman Juan S. Tenorio.
CDA has lent some $90 million, including $23 million in guaranteed loans, against $120 million extended to the public sector.
Implemented in the later part of 1997, Tenorio said the financial assistance program granted to various businesses was aimed at helping them cope with the economic crisis besetting the Northern Marianas.
“We will keep on extending it until the economy improves. It is not their fault that business has been bad, there are simply factors beyond their control,” he added.
For example, a $7,000 loan which has a seven-year repayment period has been extended to 14 years. CDA charges 5 to 6 percent interest for agriculture loans and as much as 9 percent for commercial loans.
Aside from providing technical assistance in cooperation with the Northern Marianas College, CDA has been constantly meeting with business owners to find ways on how they can help ailing establishments survive the economic woes.
“As much as possible we don’t want to foreclose because doing that would mean not only more losses to the owners but to the government as well,” said Tenorio.
As a result of the uncertainty in the economic situation, Tenorio noted the decline in the number of people opening up new businesses. CDA advises potential investors to stay away from real estate because of the property glut.
“We also tell them to go slow on their business plans, hold off expansion. It is better to be cautious and take things at a time,” he said. In its partnership with the commercial banks, CDA helps in negotiating for the best possible term for the borrowers.
