CDA Executive Director Manuel A. Sablan said the agency is finalizing its application for SSBCI funding. The program uses the program funds to help guarantee and support participation loans made by private lenders and banks in the CNMI. The program requires participation from the private financing sector of the economy to make the program work.
He told Variety that the agency has been in constant communication with the United States Treasury technical assistance staff in Washington D.C. who are guiding the agency through the application process ahead of the June 27 deadline.
The Small Business Jobs Act of 2010 created the $1.5 billion State Small Business Credit Initiative to assist states in expanding lending programs for small and medium-sized businesses. The program is open to any U.S. state or territory that establishes a new or has an existing capital access or state credit support program that meets the eligibility requirements of the act.
These requirements are what the CDA is trying to meet as it finalizes its application for the grant that could result in up to $130 million in new lending in the CNMI over the next five years.
Sablan said, “There are a lot of requirements that we have to meet in terms of completing the application.”
However, to get the funding, the CNMI, through CDA, must prove it can leverage $1 in federal investment into $10 of new lending through the participation of the local financial institutions.
Asked on the outcome of his meeting with the private lenders and bank representatives, Sablan said, “They seemed to be interested in participating in this program but they have not specifically indicated the extent to which they want to participate.”
Should CDA get the $13 million funding, any lender that meets the program’s eligibility requirements would be able to participate. “This is a program that requires private lenders’ involvement,” Sablan reiterated.
He told Variety that CDA is applying for two components of the program: loan guarantee and loan participation. He said both programs require CDA to work with private lenders. “What we are trying to do is identify prospective projects that have been identified by the Strategic Economic Plan and recommended by the two economic summits,” added Sablan.
There appears to be a demand for financing, Sablan said.
He also told Variety, “What we intend to do, as soon as we get the green light that the grant has been approved, is to put together a marketing plan and we will meet with all prospective lenders and borrowers.”
Across the nation, Hawaii recently joined the roster of states approved by the U.S. Treasury to receive $13 million which it can use to spur loans for the small businesses.
According to reports, Michigan, California, and North Carolina were among the first to have been approved for a total of $293.8 million.
The U.S. Treasury also issued a statement that Connecticut, Missouri and Vermont would be receiving $53.4 million to support lending to small businesses, which would translate to $534 million in loans for small business owners in the three states. A media release stated that these states plan to put the federal money toward a variety of programs. Connecticut and Vermont plan to use the $13.3 million and $13.2 million respectively for loan portfolio insurance that will spur banks to lend. Vermont is also eyeing loans for commercial equipment and land purchases and facilities renovation as well as technology loans that support Information Technology and bioscience-based businesses. Missouri, moreover, was reported to be planning on establishing venture-capital fund for high-tech startups.
Sablan is hopeful that once the CNMI gets approved, the $13 million will spur economic activity on the islands and result in more jobs for the people. While up to $13 million could be awarded to the CNMI the agency must carefully identify where it will get its required share of funds to match the Federal award. If CDA cannot come up with enough matching funds the program would need to be scaled back.
CDA comptroller, Stuart Smith, said that due to the crash in the economy over the past decade CDA’s available funds have decreased significantly.
“Only if CDA is aggressive in turning non-performing assets into cash can we hope to have, perhaps, $8 million in funds to commit to this program,” he said.
Some areas identified as possible uses of the funds to support new lending include investments in solar, wind, and geothermal power to reduce the strangling effect of oil imports. Also, deep-sea fish farming, aquaculture projects, and other areas that make use of the CNMI’s natural resources, instead of relying on just tourism, are targeted areas for new lending.
Interested companies engaged in financing and lending are encouraged to contact CDA Executive Director Manuel A. Sablan at 234-6245 ext. 311 or email to [email protected].
