CDA bests private finance institutions

The Commonwealth Development Authority’s administration of the Microloan Program edged out private financing institutions in the Northern Marianas in providing loan agreements to local consumers and entrepreneurs.

Averaging 17 points in the SBA Scoreboard, the government-owned CDA placed second to Bank of Hawaii in the United States Small Business Administration’s Lender of the Year competition for the financial yea 2000.

Bank of Hawaii finished with 27 points, approving loan agreements worth $1.460 million in the Fiscal Year 2000. The institution bagged the SBA Lender of the Year title this year, its second in a row since the competition was launched in 1998.

Citizens Security Bank closed a total of 14 loans worth $802,900, making the institution the third best lender in the Northern Marianas; followed by Bank of Guam with six loans worth $1.460 million; First Hawaiian Bank with three loans; Citibank with three loans; and BankPacific with two loans.

Under competition guidelines, a lender earns one point for each loan closed and receives an extra half a point for each loan made to women-owned and veteran-owned businesses.

The bonus points are intended to encourage lending in traditionally underserved markets. The lender with the most points at the end of the fiscal year wins the SBA Lender of the Year title.

Executive Director Marylou S. Ada said CDA’s Microloan Program, implemented through the assistance of SBA, was extended to the Northern Marianas to help entrepreneurs come up with the needed capital to start up a business.

“We are very pleased with our performance for the year. The Microloan Program’s objective is to extend loans and to promote entrepreneurship in traditionally underserved markets. Our performance demonstrates that we were able to do just that,” said Ms. Ada.

Of the 14 microloans sealed by the CNMI government’s lending arm in financial year 2000, six were issued to women-owned businesses, according to Ms. Ada.

She added CDA intends to beef up efforts for the further growth of the Microloan Program in order to consistently provide greater opportunities for borrowers who are unable to meet typical banking guidelines to secure the needed capital to start up a business.

SBA has recently approved the development authority’s request for additional funds under the Microloan Program worth $420,000 which would facilitate the expansion of the highly-successful program launched in the CNMI late last year.

The government’s premier lending agency is likely to upgrade the maximum amount of money that can be lent out under the Microloan Program from $25,000 to $75,000 now that SBA okayed the release of the requested additional funding.

The Microloan Program has provided a motivation for the local residents to start up a small business of their own, adding that the number of applicants for the program has tremendously increased since its introduction into the island late last year.

The Microloan Program was launched late 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.

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.

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.