The Corporation was established pursuant to State Law 3L-86-95, as amended or better known as “Business Development Act of 1994”, which create a CORPORATE BODY to be know as “Small Business Guarantee & Finance Corporation, which shall provide, promote, and widen in both scope and services reach various alternative modes of financing for cottage, small and medium-size enterprises including but not limited to direct and indirect project lending, venture capital, financial leasing, secondary mortgages and/or rediscounting of loan papers to small business.
Its statutory mandate is to help the growth of small and medium-size enterprises by facilitating financing for the establishment of new ventures and/or expansion of existing businesses designed to provide for the needs of economic development in the State of Pohnpei, Federated States of Micronesia.
Products and Services
SBGFC has a very limited offering of its services to the general public. It essentially offers only two services. These services are loan related and comprise of term loan and loan guarantee of term loans offered by local financial institutions, and commission on the credit life insurance for the direct loans provided to its clients. The fees received for the administration of those funds reportedly are less than the costs associated in administrating the loan funds.
The main aim is to provide loan guarantee to qualify businesses to help spur their growth and assure their access to financing. The program was eased during mid part of 2005 due to compelling legal and technical issues surrounding the guarantee agreement. Revival of the program is in the pipeline.
The purpose of this program is to facilitate the statutory intend for which to provide loan terms to cottage, small and medium enterprises to assist stimulate the economic growth of Pohnpei State.
Project Supervision and Monitoring
The main purpose of this activity is to ensure effective utilization of the funds that are used for the purpose for which they are given and that there is no diversion or no major departure from the plan as approved. To identify and/or anticipate critical areas in the functioning of the project and to diagnose symptoms of any weakness, to ensure that the loan is repaid within the originally stipulated period, and finally to undertake the evaluation of the borrower financial position so that probable solution to emerging problems are provided accordingly.