Chamber members hear info about loan requirements
The American Samoa Chamber of Commerce has informed its members about commercial banks loan policies and documentation requirements to be met before an application is considered complete.
Early this year some concerns was raised by Chamber members regarding the difficulties experienced in obtaining personal and business loans from Bank of Hawai’i and ANZ Amerika Samoa Bank.
And following meetings and discussions with the bosses of the two commercial banks over the past weeks, Chamber chairman David Robinson wrote to members outlining some very pertinent information required by the banks.
Among them, borrowers should be prepared to submit several years of recent tax returns as well as current and past financial statements. Robinson says “collateral will almost certainly be required and must be documented to a high legal standard.” In addition, applicants will need a business plan showing how loan proceeds will be applied and the expected financial results.
“If any of the required documents are missing, incomplete, or deficient in any way, the banks will not consider the loan application,” Robinson wrote in a three-page letter e-mailed to members.
According to the banks, inadequate documentation and less-than-full disclosure is a common reason why loan applications are not processed, he wrote.
He also pointed out that commercial banks in the territory are “cash flow lenders,” which means they are primarily concerned with the ability of the borrower to pay the loan with the cash flow of the borrowing business.
“As a cash flow lender, the banks are very concerned with not only the loan application’s business plan, but also the reputation and experience of the borrower,” he said. “Simply put, the banks are looking to make loans to people with a strong track record of business success - especially in the business for which the loan is sought - and previous repayment history.”
In closing Robinson reminded the private sector, that “banks are only likely to consider funding a start-up if the business owner has very strong collateral, a strong record repaying earlier loans, and a solid business plan.”
More details from the letter in tomorrow’s Samoa News edition.