The V.I. Economic Development Authority is a semi-autonomous government agency responsible for developing and enhancing the economy of the territory. The EDA has five member agencies: the Economic Development Commission, the Industrial Park Development Corporation, the Enterprise Zone Program, the Small Business Development Agency, and the Government Development Bank.
The EDA is governed by a seven-member board, including three people who head cabinet-level executive departments; three private citizens appointed by the governor (one each from St. Croix, St. John and St. Thomas); and one person from either the Government Employees’ Retirement System, the V.I. Port Authority or the University of the Virgin Islands. Currently the governing board of the EDA is composed of Albert Bryan Jr., commissioner of the Department of Labor; Nathan Simmonds, economic and fiscal advisor to Gov. John deJongh Jr.; Lynn Millin Maduro, commissioner of the Department of Property and Procurement; John F. Lewis, chief executive officer of Lewis Consulting; Jose Penn, chief financial officer of Penns Corporation; Randolph Allen, staff representative of the United Steel Workers of America; and Dr. Henry H. Smith, vice provost for research and public service at the University of the Virgin Islands.
Two of the EDA’s member agencies offer financing programs available to USVI businesses: the Small Business Development Agency and the Government Development Bank.
Small Business Development Agency
The mission of the SBDA includes promoting ownership and expansion of small businesses by providing financial and technical assistance to USVI resident business owners. The SBDA administers four loan programs.
Under the first program, a small business is eligible for assistance under the Small Business Development Loan Program if a person or persons meets three criteria. First, the borrower must own at least 50 percent legal or equitable interest in a small business concern, either established or to be established in the USVI. Second, the borrower must be active in the management or operation of the small business concern on a full-time basis, and the small business must be his or her principal means of support. Third, the borrower must have been born in the USVI, or the borrower’s mother or father must have been born in the USVI and the borrower must have been a bona fide continuous resident of the USVI for at least five years, or the borrower must have been a continuous resident of the USVI for at least 10 years. Applicants under the Small Business Development Loan Program are required to complete an affidavit of eligibility certifying that they meet the foregoing criteria.
In addition, to qualify for assistance under the Small Business Development Loan Program, the business receipts from all sources of any year cannot reasonably be expected at the time of application for assistance to exceed certain amounts, and employment must meet certain minimums. Five categories exist for a small business concern, and the applicant must fall within one of the five categories.
Under the first category, a small business is one with receipts of $1 million or less, whose investments in the small business concern total at least $20,000, and which employs at least two people full time.
Under the second category, a small business is one with receipts that exceed $1 million but are not more than $1.5 million, whose investments total at least $30,000, and which employs at least three people full time.
Under the third category, a small business is one with receipts that exceed $1.5 million, but are not more than $2.5 million, whose investments total at least $40,000, and which employs at least four people full time.
Under the fourth category, a small business is one with receipts that exceed $2.5 million but are less than $3 million, whose investments total at least $50,000, and which employs at least five people full time.
Under the fifth category, a small business is one with receipts that exceed $3 million but are less than $4 million, whose investments total at least $60,000, and which employs no more than 50 people full time.
The interest rate under the Small Business Development Loan Program is the Wall Street Journal Prime Rate plus 1.5 percent. The WSJ Prime Rate is presently 3.25 percent, which reflects the consensus prime rate of 30 large banks that the WSJ surveys. The program has a lending limit of $100,000.
Under the second program offered by the SBDA, a small business is eligible for assistance under the federally funded Economic Development Administration Loan Fund if the borrower meets two criteria. First, the borrower must be either a displaced St. Croix worker or the owner of a USVI small business, particularly a minority-owned business. Federal regulations define a minority business enterprise as one that is owned by one or more socially or economically disadvantaged people, including blacks, Puerto Ricans, Spanish-speaking Americans, Native Americans, Eskimos and Aleuts. Second, the borrower must be a U.S. citizen or permanent resident. The interest rate under the Economic Development Administration Loan Program is the WSJ Prime Rate plus 1.5 percent. The program limits loans to a single borrower to a maximum of $75,000.
Under the third program offered by the SBDA, a person is eligible for assistance under the Farmers and Fishermen Loan Program if the borrower meets two criteria. First, the borrower must be engaged in either commercial fishing or commercial farming, and must have been so engaged for a minimum of three years. Second, the borrower’s gross sales must be a minimum of $1,000 annually. The interest rate under the Farmers and Fishermen Loan Program is four percent per annum, and the program has a lending limit of $17,000.
Under the fourth program offered by the SBDA, a business is eligible for assistance under the Frederiksted Loan Program if the borrower meets five criteria. First, the borrower must operate a business located within the Frederiksted District of St. Croix. Second, the borrower must be the owner of and work full time in the business. Third, the borrower must have been a resident of the USVI for at least 10 years. Fourth, the gross sales of the business cannot total more than $300,000 per year. Fifth, the business cannot have more than 50 employees. The interest rate under the Frederiksted Loan Program is the WSJ Prime Rate plus 1.5 percent. The program has a maximum direct lending limit of $20,000, with a maximum bank guaranteed lending limit of $30,000.
Government Development Bank
The GBD provides financial and technical assistance to industrial and commercial businesses in the USVI. In particular, the GDB provides loans as well as medium and long-term credit to USVI business entities, and also provides equity infusions to small and medium-sized businesses to help these businesses develop into mainstream commercial banking customers. The GDB administers two loan programs.
Under the first program, a business is eligible for assistance under the Micro-Credit Loan Program if the borrower meets two criteria. First, the borrower must be a principal owner of the business, with a minimum of 51 percent ownership. Second, the borrower must have been born in the USVI or have been a USVI resident for at least five years before the date of the loan application. Loans under the Micro-Credit Loan Program are unsecured, with a fixed interest rate of five percent per annum and a maximum lending limit of $50,000. The term of a loan under the Micro-Credit Loan Program cannot exceed five years or 60 months.
Under the second program offered by the GDB, a business is eligible for assistance under the federally funded Intermediary Relending Loan Program if the borrower is a U.S. citizen or permanent resident. The interest rate under the program is the WSJ Prime Rate plus 1.5 percent, and the program has a maximum lending limit of $100,000.
The average approval time for loan programs administered by the SBDA and the GDB is between 45 and 60 days from the date the borrower’s complete application is submitted. Each loan requires approval by the EDA’s governing board, with five members of the seven-member board constituting a quorum. Application forms for all loan programs offered by the SBDA and the GDB are available by contacting Carolyn Henry at (340) 714-1700 or by email at chenry@usvieda.org. In addition, a loan-application checklist, personal reference form, personal financial statement form, and some loan application forms are available on the EDA’s website: http://www.usvieda.org.
Marjorie Roberts is a tax and business attorney on St. Thomas who represents clients participating in the different programs that fall under the Economic Development Authority. She previously served as chief counsel to the V.I. Bureau of Internal Revenue and as an attorney advisor in the U.S. Treasury’s Office of Tax Policy. Lisa Wisehart has been a legal assistant in the law offices of Marjorie Roberts, P.C.. for four years. Wisehart received her law degree from Indiana University in Bloomington, where she was a managing editor of the Indiana Journal of Global Legal Studies and clerked for the Indiana Court of Appeals in Indianapolis before returning home to St. Thomas 10 years ago.
