U.S. Virgin Islands banks and businesses are beginning to take more advantage of V.I. Economic Development Authority loan guarantees, bringing a few million dollars in new commercial lending leveraged with federal dollars to the territory, EDA Executive Director Percival Clouden told the Legislature on Thursday.
In 2011, the U.S. Treasury approved $13.1 million in federal funding for loan guarantees through the U.S. Virgin Islands State Small Business Credit Initiative Program. At first, lenders and businesses were not taking full advantage of the loan guarantees to help both borrowers and lenders profit. (See Related Links below)
EDA officials said the program resulted in $923,000 in lending last year, but in more than $3 million to date.
"I see there is some growth, but is it growth in lending or just growth in the amount of loan guarantees?" asked Sen. Nereida "Nellie" Rivera-O’Reilly.
"Both," Clouden said. "Because of our consistent efforts in meeting with lending officers, we are beginning to see increased interest in the SSBCI program," he said.
By the end of June, Clouden said, banks in the territory approved and closed 24 collateral enhancement and loan guarantees worth over $3 million. "These loan enhancements have enabled businesses to create 37 new jobs, retain 215 jobs, and inject an estimated $8.6 million in direct economic activities," he said.
The EDA oversees a variety of economic development programs, including the EDC, the Industrial Park Development Corporation, the Small Business Development Agency and the Enterprise Zone Commission.
Clouden testified that the department was doing everything in its power to spend only when necessary. “This budget contains no frills or buffers and it is the bare minimum that is necessary to successfully carry out the mandates assigned to this authority,” he said. “It is a spending request that compels us to focus on essential priorities and make the difficult choices that will bring the greatest rewards to the territory.”
Clouden requested a General Fund appropriation of $4.9 million, which is $18,260 less than last year.
No votes were taken during the information gathering budget hearing.
All committee members were present. Noncommittee members Sens. Alicia “Chucky” Hansen, Janette Millin Young and Tregenza Roach were also present.