American Samoa Venture Fund reviewing applications
A handful of applications will be reviewed by a six-member committee for funding from American Samoa’s share of the federal State Small Business Credit Initiative (SSBCI) program, overseen by the Commerce Department, which is looking for private investors and financial institutions to provide matching funds, according to Commerce director Keniseli Lafaele.
American Samoa was awarded $10.5 million several years ago for the SSBCI but efforts to get the program off the ground have faced many obstacles. Under the newly revamped program by the Lolo Administration, the program is now called, the American Samoa Venture Fund.
At a House committee hearing last Thursday, Lafaele explained that the program is already launched with four or five businesses whose applications are now set to go through the Venture Fund committee review.
Lafaele explained that $3.5 million is currently available for the local program, which requires investors or financial institutions to invest by matching the federal money, awarded to each business.
He says DOC is working with ANZ Amerika Samoa Bank, Development Bank of American and the ASG Employees Retirement Fund — as financial institutions — to provide the matching funds.
Responding to follow-up Samoa News questions after the House hearing, Lafaele explained that the six member “investment committee” will convene soon and decide on applications to be funded.
Asked what happens next after the investment committee gives approval, Lafaele said the fund manager meets with the sources of private funds matching the Venture Fund program.
For the four or five applications, Samoa News asked about the type of businesses involved and how much each applicant has requested in funding. “I can't comment on the specifics, but I can say these are the types of businesses that would create employment, generate government tax revenues, import substitution or export opportunities and new monies into the economy,” Lafaele told Samoa News over the weekend.
Lafaele also couldn’t comment on whether the applicants have secured a private investor, or local financial institution. “Suffice it to say private matches can be in the form of equity investment — shareholding, or debt, loans from financial institutions,” he explained.
As to whether the US Treasury gives final approval for local businesses to get funding, Lafaele explained that US Treasury does not, the “US Treasury reviews whether our program process complies with our approved modified program and US Treasury SSBCI guidelines.”
At the House hearing, House Vice Speaker Fetu Fetui Jr., voiced — what others in the community are talking about — it’s taking too long to get this program off the ground. Additionally, the application process is taking too long thereby delaying boosting economic developments in the territory.
Fetui informed Lafaele about a business person who put in an application about two years ago and still nothing has happened. “This waiting process given to applicants is frustrating,” he said adding that DOC announced this program a long time ago and still no money has been disbursed.
The DOC director apologized for the delay but notes that “we have to look for investors” who will match the federal funds. He said the first SSBCI funding allocation of $3.5 million is now available and if a match is found — either through investors or banks — that would bring a total of $7 million to boost the local businesses.
Once the $3.5 million is expended, DOC will then request, a second allocation, until the entire $10.5 million in federal money is used, he said, and reiterated that they are working on getting investors as well as financial institutions.
“I totally disagree with you on [using] the Retirement” fund, and should not be a part of the program, Rep. Vui Florence Saulo told Lafaele.
“So we don’t have investors?” Vui asked to which Lafaele responded that it is very difficult to get investors to invest in American Samoa. He said that they have talked to local investors, who are business owners, who all wanted to invest in their own businesses but not other businesses.
“I just wanted to get to the bottom of this. What if, in the worst-case scenario, the banks don’t respond and you are not able to find any investors? What then?” Vui asked.
While it’s been difficult, Lafaele said, they have made solid communication with ANZ bank, and he was in Guam two weeks ago to meet with top officials of ANZ Guam Inc., which oversees the local ANZ operation.
At the discussions in Guam, Lafaele said bank officials have stated their willingness to assist with the local Venture Capital program. He also revealed that the governor was to meet soon with ANZ’s chief executive officer, who oversees the bank’s Pacific operations, which includes Guam and American Samoa.
Lafaele said the Venture Capital program is one of the issues for the meeting in which the governor will seek ANZ’s assistance.
At a January cabinet meeting, Lafaele announced that the fund manager is local attorney Marshall Ashley and DOC staffer Mike McDonald is attached to the SSBCI program. Additionally, the fund adviser is Andy Moss.