CDA renews call for more lending capital from SBA

With its office swamped with piles of loan applications from local businesses, the Commonwealth Development Authority will ask officials of the U.S. Small Business Administration to support its request for additional funding for the Microloan Program.

U.S.-SBA Regional Administrator Viola Canales, along with Guam Branch Manager Kenneth Lujan, will be meeting today with CDA officials led by Board Chair John S. Tenorio and Executive Director Mary Lou S. Ada.

The discussion will focus on the CDA-SBA Microloan Program and other SBA-funded programs that may be administered by the CNMI government’s premiere lending arm.

Mr. Tenorio is hoping to raise CDA’s application for additional $420,000 lending capital from SBA for the Microloan Program, which caters to clientele underserved by traditional lending institutions, during the meeting with Ms. Canales and Mr. Lujan.

The requested amount is the balance of the maximum $750,000 that may be borrowed by an intermediary lender, such as the development authority, from SBA during the first year of participation.

The Microloan Program provides capital for start-up of small businesses or the expansion of existing establishments. Clients have obtained loans that range from as low as $100 to as much as $25,000.

At least 11 small-scale businessmen obtained fresh capital from the Microloan Program instituted by the development authority through a seed fund obtained from the U.S. Small Business Administration.

The Microloan Program was launched October last year to help stimulate the Commonwealth’s slumping economy by assisting small businessmen obtain fresh and additional capital for either new or existing businesses.

The Microloan Program, a partnership between CDA and the SBA, was established to help small businesses cope with economic difficulties. SBA loaned some $330,000 to CDA for the program.

Under the program, small businesses can obtain as much as $25,000 in fresh loans. CDA is the first microlender in the Western Pacific although talks are already underway for the SBA to extend the program in other Micronesian islands.

Application for credit under the Microloan Program are concentrated on the service-type investments, majority of which are existing businesses that need additional funding or capital.

The Microloan Program is expected to offshoot the slowdown in lending activities undertaken by private commercial banks due to economic downturn which virtually dampened capabilities by borrowers to repay loans.