Ka Wai Ola - Office of Hawaiian Affairs, Volume 10, Number 6, 1 June 1993 — Loan fund helps entrepreneurs get started and expand [ARTICLE+ILLUSTRATION]

Loan fund helps entrepreneurs get started and expand

The Native Hawaiian Revolving Loan Fund provides loans to native Hawaiians wanting to start a new business or to e.\pand an existing one. Its primary purpose is to expand the entrepreneurial opportunities of Hawaiians who are unable to secure conventional financing through traditional lending sources. The growth of new and existing Hawaiian-owned businesses creates a visible Hawaiian eeonomie sector throughout the state. The loan fund is a federal demonstration program, supported by the Administration for Native Americns (ANA) and administered by the Office of Hawaiian Affairs, Eeonomie Development Division. The program was originally a five year demonstration project (19871992), with just under $3 million funded by ANA. Repayments and interest on loans provide additional loan eapiial, making it possible for loans to continue to be made. As of September, 1992, the Native Hawaiian Revolving Loan Fund had made 99 loans, totaling $3,593,897. In October, 1992, the Native Hawaiian Revolving Loan Fund was reauthorized for three more years, ending in 1995. The first year is funded at $1 million per year from ANA and $1 million in matching funds from the Trustees of the Office of Hawaiian Affairs. However, current demand for loans now totals $42 million. Loan fund manager Ken Sato says "It's proven that there is a need for this kind of program. Hawaiians comprise 20 percent

of the population, but only four percent of all business ownership in Hawai'i. That's a great disparity." Sato notes that while the loan fund has experienced a delinquency rate that is somewhat higher than the commercial loan average, this is to be expected in this type of loan fund program, where businesses are more high risk to start, and meanwhile feeling the effects of the current national recession. The NHRLF also provides free or low cost management and technical assistance through direct staff support and/or through consultants contracted by OHA. Loan fund staff consist of Sato, loan officers John Serrano, Adrian Lau and Richard Yanagawa, and secretary Lisa Rodrigues. Basic loan information:

• Maximum loan amount is $100,000. • Maximum term is five years. • Interest rate is 2 percent below the 6-month Treasury bill effective the date of loan approval, and fixed for the term of the loan. • Loan ean be used for working capital and equipment • Loan cannot be used for purchase of real estate and/or building construction. How to apply: • Fill out pre-application (questionnaire). • Send in pre-application with a copy of birth certificate • Provide requested documentation, e.g. ineome tax retums, personal financial statements, business financial statement:., resume. • Provide a business plan detailing intended operation or expansion, and projected eamings and

expenses. A decision on the loan will be made 60 to 90 days after submittal of required docments. The loans cannot be processed without the requested paperwork. Steps in the review process: • A review by the loan officer, who will refer viable proposals to the Loan Review Committee, a volunteer group of financial experts, if applicant is eligible and all requested documentation has been provided. • The Loan Review Committee will recommend the loan to the Loan Fund Advisory Board if they agree the proposal has merit. The advisory board, a group of business and professional experts, gives final approval. • The loan officer then documents the loan, including insurance requirements, loan security if

applicable, permit and licensure, and other documentation that might be required by law. The loan is then closed. Eligibility: To be eligible for an NHRLF loan, an applicant must: • Be native Hawaiian. Although there are no blood quantum restmctions, documentation (birth certificate and some form of pieture identification) is required. • Be starting or expanding a business that is 100% Hawaiianowned. • Have a good credit record. • Have been denied a loan by two traditional lending institutions. • Not have any immediate family employed by the Office of Hawaiian Affairs. For information on the Native Hawaiian Revolving Loan Fund, eall:

Receiving his minority small business advocate award, Bob Fujii (center) is congratulated by Sam Slom of Small Business Hawai'i (right) and Andrew Poepoe, of the Small Business Administration.