CDA eases terms on loans payback

The Commonwealth Development Authority has taken steps to help locally-owned businesses weather the current economic crisis through flexible loan repayment terms and other assistance aimed at easing financial burden on their borrowers.

Marylou S. Ada, executive director of the chief government chief lending agency, said these measures have been put in place even before a request for assistance from lawmakers came.

“There is no need for that because we have been doing that ever since CDA was created,” she told in an interview, responding to a recent House resolution asking the agency to refinance loan agreements granted to CNMI residents.

The temporary measure is in efforts to aid businesses severely hit by the worst crisis to hit the Northern Marianas in half a century, as they may not be able to meet their financial obligations to CDA without more favorable terms.

It will also help these borrowers during their financial straits while they find ways to recoup lost investments, according to the resolution sponsored by Rep. Alejo M. Mendiola.

But Ada maintained the agency has initiated steps to safeguard their investments, saying they refer them to the NMC-Business Development Center for counseling and other technical assistance.

“If a borrower is having a hard time making payment, we work out a solution,” she said, adding consultation with CDA clients is on a one-on-one basis.

Among the problems usually encountered by their borrowers include cash flow difficulties, misguided diversification of funds and business expansion, according to Ada.

“We are (dealing with) those problem loans so that they will not become huge problems,” she explained, “and that we can catch them early and find solutions” to meet their monthly installment.

Most of the businesses funded by CDA loans are consumer-driven that a low money circulation in the economy immediately affects their income.

The agency has also ruled out foreclosure as a last resort since they try to seek solutions first to get these companies back on track, according to Ada.

In fact, foreclosures ordered by the court in recent months were blamed on financial problem before the crisis struck the island in late 1997. “There hasn’t been one lately because we all understand that everybody is going through hard times,” she said.

CDA has been granting loans to locally-owned businesses as seed money to start their ventures in a bid to allow the indigenous population to participate in the economic development of the island.

Heavily dependent on the tourism industry, the commonwealth has been battered by sharp decline in the number of visitor arrivals in the past one and half year due to the prolonged economic recession in Asia, its main source of tourists.

Nearly 2,000 tourist-related businesses have been forced to close in recent months in view of the downturn in the tourism activity, and economic analysts say the crisis is likely to last until 2002.