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Moratorium on new loans stays until CDA builds up reserves
The recent moratorium imposed by the Commonwealth Development Authority on its loan program will likely remain until the agency builds up its reserves to keep new loans afloat, according to CDA comptroller Danny Militante.
CDA implemented the moratorium on their new loans about two months ago. Militante said the enforcement was “temporary” until the agency builds up reserves for new loans.
The comptroller declined to give figures about the target “reserves” for new loans but emphasized that the agency is recording progressive numbers in its current collection.
As of this week, it was disclosed that CDA has $35.696 million in loan receivables from borrowers: $11.9 million for active borrowers; $8.254 million for debt-relief program members; and $11.6 million in loan balance from court judgments.
These are the three biggest “receivable” areas of the agency.
Militante admitted that due to the high number of clients not making good on their loan payments to CDA, issuance of new loans to borrowers was suspended indefinitely.
However, because CDA is also handling the new Small Business Credit Initiative Program, which received $13 million funding approval from the U.S. Treasury, Militante said businesses that might be affected by the CDA moratorium on new loans have now an option to consider-apply to SBCI program which has already made available over $4 million to the CNMI borrowers.
CDA loan manager Oscar Camacho last Wednesday disclosed that three commercial banks have already intensified willingness to participate in the program.
Under the SBCI program, applications will be submitted directly to the banks which will entirely decide on the loan proposal. CDA and the Department of Commerce will serve as support system for applicants in terms of trainings and other assistance.
Saipan Tribune learned that CDA is facing high delinquency rate on loans which was also a factor on the decision.
Militante told Saipan Tribune that the agency is assessing its cash position while at the same time evaluating its underwriting policies and procedures to be able to determine when it could open up the program.
CDA is an autonomous agency created by law to assist the public by offering commercial loans to qualified borrowers. It also serves as the government’s economic development arm and financial adviser.
By Moneth Deposa
Reporter
