CNMI qualifies for another $4M for small biz credit program

The CNMI has crossed the 80-percent threshold qualifying them for the next round of funds for a U.S. Treasury-backed small business program.

Office of the Governor press secretary Ivan Blanco told Saipan Tribune yesterday they have disbursed about 81 percent, or some $3.5 million, of the first $4.35 million from Treasury toward the State Small Business Credit Initiative, a program that leverages private lending to increase the amount of credit available to small businesses.

The State Small Business Credit Initiative began in March 2012 when the U.S. Department of Treasury approved $13.2 million in funding to the CNMI, an initiative borne out of President Barack Obama’s Small Business Jobs Act of 2010.

SSBCI provides federal funding to states and territories to strengthen programs that support lending to small businesses and manufacturers.

The CNMI Department of Commerce received $4.35 million during the onset of the program, which is the first of three disbursements of the funds.

Department of Commerce Secretary Mark O. Rabauliman said they are continuing their work with the Commonwealth Development Authority to draw on the second batch of funding.

“We are doing our best to deploy funds as soon as possible to help businesses across the spectrum, from startups, refinancing, construction, manufacturing, and acquisitions,” Rabauliman said in a statement.

Gov. Ralph DLG Torres called the SSBCI program “essential to spur economic activities and contribute to business growth.” “This initiative has spurred business expansions and start-ups that would otherwise have been shelved due to lack of cash flow or collateral,” Torres said in a statement yesterday. “I am pleased that we have passed the 80-percent mark and are now eligible to apply for the second tranche. I’d like to thank Bank of Guam and City Trust Bank for being strong supporters and participants in this program, and I encourage entrepreneurs to talk to these participating banks to help you with your business ideas.”

CDA is the implementing agency for the CNMI SSBCI Program. The CNMI is currently approved for two programs, which include the Loan Purchase Participation Program (LPPP) designed to assist lenders, and borrowers in financing diversification projects enabling companies to acquire necessary financing that might otherwise be unavailable due to a cash flow shortage.

The LPPP can help shortfalls in cash flow for new or growing businesses with up to 40 percent of the loan amount.

The second program known as the Collateral Support Program (CSP) allows small businesses to acquire necessary financing that might otherwise be unavailable due to collateral shortfall. The CSP supplies pledged cash collateral accounts to lenders to achieve this goal for approved projects. This can help fill shortfalls in collateral required by participating banks with up to 50 percent of the loan amount secured by cash deposit.

The SSBCI is available to eligible business owners and emphasizes the need for a strong business plan. Passive real estate, business investments, gaming, delinquent federal, or state taxes, and reimbursement of ownership interests are ineligible for this program.