CDA anticipates new Microloan pact with SBA

The Commonwealth Development Authority is anticipating to receive official word from the Guam-based United States Small Business Administration for the renewal of its Microloan Program agreement, according to Executive Director Marylou S. Ada.

Once the agreement is renewed, CDA may qualify for additional funds for the continuos release of credit packages to small business owners in the Northern Marianas through the Microloan Program which was launched here in partnership with SBA.

Ms. Ada disclosed SBA has already informed the development authority that its application for new funds for the Microloan Program is currently under review by the federally-funded agency.

“We expect to receive a word from them in the next two weeks at least or after they have completed reviewing the documents we have submitted to support our application for additional funds,” she said in an interview.

Ms. Ada said CDA is confident SBA will approve its request for fresh funds that will replenish its depleting portfolio for small-scale investors in the Northern Marianas.

She added 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 if SBA would release the requested additional funding.

She explained the initial $350,000 fund earmarked by the SBA for the Commonwealth’s own Microloan Program has already depleted and that more applications are now gathering dust at the CDA office pending the approval and release of the additional $700,000.

Ms. Ada pointed out 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 huge turnout in the Microloan Program as well as the pile of pending applications should facilitate the approval of CDA’s request for additional funding from the United States Small Business Administration.

Over $300,000 worth of credit packages have already been approved by the government’s lone lending agency since the Microloan Program was introduced 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.

At the same time, CDA Board Chair John S. Tenorio said the implementation of the Microloan Program has paved the road for the birth of new businesses to replace those that have closed shop.

According to Mr. Tenorio, the Microloan Program has given a significant number of local entrepreneurs the opportunity to start up their own business through credit packages of up to $25,000.