HOUSE OF REPRESENTATIVES

H.B. NO.

851

TWENTY-SIXTH LEGISLATURE, 2011

 

STATE OF HAWAII

 

 

 

 

 

 

A BILL FOR AN ACT

 

 

RELATING TO A COMMERCIAL LOAN PROGRAM FOR SMALL BUSINESSES.

 

 

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

 


     SECTION 1.  The legislature finds that the economy of the island of Lanai is at a critical juncture for small businesses on that island.  Since the closure of pineapple operations on Lanai, there has been a need for businesses that can optimize the use of the personal skills and assets of the people of Lanai and can maintain the rural lifestyle and sense of community that is Lanai's character.  The legislature further finds that the economy of Lanai will be best supported by the development and enhancement of community-based rural development and businesses that preserve the qualities unique to the local community.  However, because the landowner, Castle & Cooke, Inc., is only giving short-term leases to business owners in Lanai City, they are having a difficult time in getting bank loans to make improvements to their businesses.

     The purpose of this Act is to establish a temporary revolving loan program to stimulate the development and growth of small businesses on the island of Lanai.

     SECTION 2.  (a)  There is established in the department of business, economic development, and tourism a temporary revolving loan program to provide financing for small businesses on the island of Lanai.  To carry out the loan program, the department shall establish a revolving loan fund from which loans shall be made in accordance with this Act, and into which all payments, interest, and fees collected by the department on the loans shall be deposited.

     As used in this section, "small business" means a business with not more than              employees.

     (b)  The department may make loans to small businesses for the purpose of financing plant construction, renovation, conversion, expansion, or for the acquisition of equipment, machinery, supplies, or materials.

(c)  The loan program shall make loans to any qualified applicant who is:

(1)  A small business authorized to do business in the State;

(2)  Not able to obtain a loan on reasonable terms from a financial institution;

(3)  Able to furnish information showing the ability to repay the loan from income arising from the business; and

(4)  Able to demonstrate that the applicant has enough equity invested so that, if the loan is approved, the applicant can operate on a sound financial basis.

     (d)  Before applying to the department, an applicant shall make every effort to obtain the loan from a financial institution, including the United States Small Business Administration.  If the applicant is unable to obtain the loan from a financial institution or other source, the applicant shall ascertain whether a financial institution or other source, or both, would be willing to make the loan in participation with the department.

     (e)  All applicants applying for loans shall utilize the department's loan application form or the appropriate United States Small Business Administration forms, and shall submit the application forms to the applicant's principal financial institution.  If a loan is not available, or if the financial institution declines to make a participation loan, the applicant shall then submit the application to at least one other financial institution before submitting the application to the department.

     (f)  Direct or participating loans to any one applicant shall not exceed $            , and no loan shall be granted for a period exceeding             years.  Each loan shall bear a simple interest rate on the unpaid principal balance at a rate of one per cent below the prime rate or at a rate of seven and one-half per cent a year, whichever is less.  The commencement date for the repayment of the first installment on the principal and interest of each loan may be deferred for a period not to exceed two years.

     (g)  Each borrower shall annually submit to the department financial reports of a balance sheet and profit and loss statement on either a fiscal year or calendar year basis, depending on the tax reporting period of the borrower.

     SECTION 3.  The director of finance is authorized to issue revenue bonds in the sum of $                or so much thereof as may be necessary and the same sum or so much thereof as may be necessary is appropriated for fiscal year 2011-2012 for deposit into the temporary revolving fund established in this Act for the establishment and operation of the temporary revolving loan program under this Act.

     SECTION 4.  The department of business, economic development, and tourism shall expend the moneys in the temporary revolving fund established in this Act for the purposes of this Act.

     SECTION 5.  All unencumbered moneys remaining in the temporary revolving fund established in this Act shall lapse to the credit of the general fund upon the repeal of this Act.

SECTION 6.  This Act shall take effect on July 1, 2011, and shall be repealed on June 30,     .

 

INTRODUCED BY:

_____________________________

 

 


 


 

Report Title:

Temporary Small Business Revolving Loan Program; Lanai

 

Description:

Creates a temporary small revolving loan program within DBEDT for small businesses on Lanai.

 

 

 

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