CDA expands loan portfolio

Faced with depleting funds due to the increasing number of loan applicants, the Commonwealth Development Authority is laying the ground work for a possible expansion of its risks through partnership agreements with federal agencies.

CDA Executive Director Marylou S. Ada disclosed the CNMI government controlled lending agency’s portfolio is slowly getting saturated which may soon not able to accommodate all qualified loan applications for start-up capital or supplemental funding.

“Since our money is getting so tight, we want to leverage it by signing cooperative and partnership agreements with United States government agencies like the Small Business Administration and the federal Department of Agriculture,” she said.

Ms. Ada said the development authority is exploring other possible ways to bring in fresh money into the Northern Marianas economy through the expansion of CDA’s risks by entering into cooperative agreements with other U.S. lending offices.

“We are looking at all avenues to enable us to bring fresh money into the Commonwealth and be able to give out more loans. CDA funds are getting tighter so we want to maximize its use by forging partnership with other agencies that can provide assistance to us,” she stressed.

At present, CDA is looking at signing an agreement with an affiliate agency of the U.S. agriculture department — the Rural Development Program –to provide CNMI businesses new loan packages.

Ms. Ada said CDA is holding initial discussions with the Rural Development Program to bring Business and Industry Loan packages into the CNMI to expand the agency’s lending base amid economic contraction and stock-piling applications for fresh capital.

“We would like to serve more people who are in need of fresh money for start-up or expansion of their businesses but could not obtain loans from private institutions due to slowdown in economy,” she added.

With the Business and Industry Loan Program, businesses can obtain new loans from the Rural Development through credit packages guaranteed by the development authority.

A Memorandum of Understanding which will pave the road for the bringing in of the program to the Northern Marianas is already in the works, according to Ms. Ada.

Under the proposed loan program, CDA will guarantee at least two-thirds of the total amount of credit obtained from private financing companies like commercial banks.

Rural Development will come in to settle the loan with the bank when it turns sour. CDA will then reimburse the amount incurred by the Rural Development in settling the account with the private financing company.

Ms. Ada said CDA will soon enter into partnerships with private banking institutions identified by the Small Business Administration to kick off the Business and Industry Loan Program.

Later last year, CDA launched the Microloan Program in partnership with SBA to help small businesses cope with economic difficulties through loan packages of up to $25,000.