Q & A
From our website, by visiting our office in Guam, or through the Pacific Islands Small Business Development Centers in Kosrae, Palau, Guam, CNMI, Chuuk, Republic of the Marshall Islands and Yap. In Pohnpei, applications may be picked up at the Small Business Guaranty and Finance Corporation.
A comprehensive business plan with Proforma financial statements will be required as part of your loan application.
The key components of a business plan required by the bank may be downloaded from our website under “Downloads”. At minimum, it should contain the following:
- Business Information: Executive Summary, Product & Services, Marketing, Competition, Operating Procedures, Management & Staffing, Pricing, etc.
- Financial Information: Proforma balance sheet, income statement, and cash flow for at least 3 years forward with realistic assumptions and projections; and Sources and Uses of loan proceeds including personal equity.
- Supporting Documents: Copies of GRT filings, Tax returns, personal financial statements, copy of check stub, copy of proposed lease or purchase agreements, copies of letter of intent from suppliers, descriptions and maps of properties offered as collateral, articles of incorporation, bylaws, etc.
Internet resources, Pacific Islands Small Business Development Centers in the region, the Pohnpei Business Development Center, development-related government agencies, and private consultants.
Typically the bank will require the last three (3) years´ financial statements or GRT filing and business income tax returns, business license, and other basic information regarding the business.
Up to four (4) weeks approval time, if the loan is complete. Processing may take longer if the applicant fails to provide requested information or clarifications in a timely manner.
The bank will notify you in writing stating the reasons the application was declined. You may seek financing from other lending institutions.
The bank will issue a commitment or approval letter with the terms and conditions under which the bank would lend you the money.
The bank will direct its attention and review on the 5 Cs of credit. When applying for a loan and preparing your business plan, you should keep them in mind:
- Character: Your integrity and sincerity. The bank may determine your creditworthiness with a credit bureau report or local credit checks. Your answers to questions in the loan application regarding any past criminal convictions, bankruptcy, and debts you are party to are also used to evaluate your character.
- Capital: This represents your own money or equity you put in the business. It is sometimes called the net worth. The more capital you infuse into the business, the greater the chance your loan will be approved. How much capital you invest in the business is an indication of your commitment.
- Collateral: Assets to secure the loan/debt. The bank will normally take a lien, mortgage, or security interest in whatever assets are being financed. The bank also looks to the personal assets of guarantors or principal owners of the business for additional security. If the amount of borrower´s capital is low, the bank will place a higher emphasis on collateral.
- Capacity: Sufficient cash flow to service the obligation. One of the first things the bank looks for is your ability to repay the loan from the primary source of repayment which is cash flow from operation. We look at your projected income streams and your expenses to determine your net profit to gauge your capacity.
- Conditions: Condition of the overall economy and borrower. Ask yourself, under what conditions does my business operate? From an external standpoint, are the conditions favorable? Who are my competitors, and how does my pricing strategy compares with theirs? What are my competitive advantages? What is my staffing like? Is there a management succession plan in place?
For additional questions or comments, contact us at (671) 477-0047.