‘Small biz initiative may sustain growing economy’

If the CNMI spends the $13 million under the State Small Business Initiative program by 2017, the CNMI may see its return in local loan programs tailored to fit the needs of a growing economic base, according to Nancy Montoya, U.S. Treasury consultant and principal at TTA Consulting Group.

“This is an allocation that comes down from Treasury. We have to get the funds out by 2017 but if we are successful, and successful in making good loans, then when Treasury exits the program in 2017, we get to keep those funds here,” she said, adding that both the principal and the interest of these funds may be used locally.

“The beauty of this is it can be tailored to meet the needs of local businesses. It can change to meet what the needs of the businesses are,” she said.

She said if the tourist base grows between now and 2017, some businesses may need to borrow money to provide services to the growing casino industry, such as tour services.

So far, four loans have been closed under the program, with five approved for a total of $990,000, according to Aaron Wood, loan officer of the Commonwealth Development Authority.

Of the loans closed, three are for businesses on Saipan, and one on Rota.

“We have a lot more money to use,” he said.

About $4 million is already at the local level, according to Wood. While the program expires in 2017, the “important deadline” is June 2015, when 80 percent of the $4 million must be committed to receive the next batch of funds.

A total of 18 jobs have been created on Saipan, Tinian, and Rota in the last six months with the loans that were closed, Wood said.

Business expo
From bank representatives to local entrepreneurs, over 125 people showed up at CDA’s Small Business Banking Expo at the Hyatt Regency Saipan last Saturday to learn more about the opportunities under SBBCI.

These people ranged “all along the spectrum,” from businesses that are just starting to ones that are expanding, according to Wood.

He said the SBBCI essentially allows businesses that are turned away by banks due to a shortfall in collateral to avail of this credit enhancement program.

Also if these businesses need technical assistance with packaging business plans to entice bank loaners, then CDA refers them to the CNMI’s Small Business Development Center’s director, Perry Inos.

“We’re excited to see small business opportunities. We’re excited to see new entrepreneurs follow their goals and vision. We’re just happy to be a part of this,” Wood said.

Some of the ideas Montoya has heard from aspiring businesses range from fishing to alternative energy, retail to auto part stores, restaurants to other service industries.

One of the big success stories of the expo, she said, was how people from “all walks of life” participated, like women entrepreneurs.

“Women are opening business faster than men. It’s really great to see a lot of women here on island come,” she said.

From top elected officials to people running the “restaurant next door,” Montoya said, the island community has been “so supportive” of the program.

Turn that ‘no’ into a ‘yes’
Montoya called the CNMI SBDC the “coach for businesses” looking to get loans from banks here.

“We try to take your ‘no’ to a ‘maybe.’ Then we try to transition your ‘maybe’ to a ‘yes,’ with the SBBCI program,” said SBDC’s Inos.

Banks often turn businesses away for lack of collateral, which is common on island.

“We are the matchmakers. We make borrowers as ready as they can be,” he said.

SBDC can help loaners prepare financial feasibility studies, taxes, sales projections, financial statements, “the whole nine yards in accounting,” Inos said.

Because some banks on island consider business running for two years to be “start-ups,” it can be difficult to get banks to trust the proposals of these businesses, he said.

“We want to take the banks and the borrowers and put them in one room and see the demand, and today [at the expo] I think they were overwhelmed. I think it’s going to be a good relationship now,” he said.

Right now, the small business community in the CNMI is “booming” in preparation for a different economy, according to Inos.

“It’s booming quicker than we can respond,” he said. “All these little businesses who can bring tourists will have a bigger customer base.”

More tourist agencies, ATVs, adventure packages, eco-farms, more customers for hotels, and more farms supplementing them can be expected, he said.

“We have more business licensing approved this year than last year,” he said.

He believes the SSBI program can help sustain the success of these businesses and the economy.

“We want to take $13 million and turn it into $100 million. If we insert $13 million into banks, these banks will have more reserve to push out more loan securities,” he said.