210-6. Direct loans, terms, and restrictions
(a) The department of business, economic development, and tourism may make loans to small business concerns for the financing of plant construction, conversion, expansion, the acquisition of land for expansion, the acquisition of equipment, machinery, supplies, or materials, or for the supplying of working capital. The department may also make loans to assist businesses located in communities near military installations to develop infrastructure to minimize the possibility of or assist in the mitigation of the adverse effects of the closure or reduction in capacity of a military installation. The loans may be made in conjunction with loans made by other financial institutions, including the Small Business Administration. Where the loans made by the department are secured, the security may be subordinated to the loans made by other financial institutions, when the subordination is required to obtain loans from such institutions. The necessity for and the extent of security required in any loan shall be determined by the director of business, economic development, and tourism.
(b) The department may make loans to business
concerns located in a county with a population of less than 150,000; provided
that the interest on loans made under this subsection shall bear simple
interest at the rate of three per cent below the prime rate or at a rate of
five and one-half per cent a year, whichever is lower. For purposes of this
subsection, the prime rate shall be determined on the first day of each month,
and shall be the rate charged by the two largest banks in the State of Hawaii identified
by the department of commerce and consumer affairs. Should there be a
difference in rate charged by the institutions, the lower of the two shall be
used. Payments required under loans made under this subsection may be
deferred, but no loans made under this subsection shall be forgiven.
(c) Except as may be expressly provided
otherwise for loans made under subsection (b), the foregoing powers shall be
subject to the following restrictions and limitations:
(1) No loans shall be granted unless financial
assistance is not available to the applicant. The condition may be waived by
the director for participation loans or loan guarantees with a private
financial institution;
(2) The amount of the loan or loans to any one
applicant at any one time shall in no case exceed a total of $1,000,000;
(3) No loan shall be made for a term exceeding twenty
years;
(4) Within counties of a population exceeding
150,000, each loan shall bear simple interest 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
lower. For purposes of this paragraph, the prime rate shall be determined on
the first day of each month, and shall be the rate charged by the two largest
banks in the State identified by the department of commerce and consumer
affairs. Should there be a difference in rate charged by the institutions, the
lower of the two shall be used;
(5) The commencement date for the repayment of the
first installment on the principal of each loan may be deferred by the
director, but in no event shall such initial payment be deferred in excess of
five years; and
(6) The payment of interest on the principal of a
loan may be deferred by the director, but in no event shall interest payments
be deferred in excess of two years from the date of issuance of the loan.
(d) Except as may be expressly provided
otherwise for loans made under subsection (b), any restriction or limitation in
subsection (c) may be waived at the director's discretion where the applicant
is a reuse or recycling business that meets the following criteria:
(1) The business has potential to have an impact on
overall solid waste reduction and achievement of the State's reduction goals;
(2) The business addresses the alternative management
of wastes identified by the solid waste disposal facility operators as
problematic;
(3) The business maximizes economic benefits through
import reduction or an increase in the tax base;
(4) The business has potential for job creation; and
(5) The business has a plan that accurately reflects
detailed and justifiable expenses and revenues, shows potential for profit, and
an ability to meet market demand for end products.
(e) The department may contract with any
financial institution for services including servicing or administering loans
pursuant to this section.
(f) For purposes of this section,
"financial institution" means any organization authorized to do
business under state or federal laws relating to financial institutions,
including without limitation, banks, savings banks, savings and loan companies
or associations, financial services loan companies, and credit unions.
[L 1963,
c 76, §7; am L 1964, c 42, §4; Supp, §98R-7; HRS §210-6; am L 1976, c 121, §1;
am L 1979, c 134, §1; am L 1984, c 92, §1; am L 1986, c 257, §1; am L 1987, c
243, §1 and c 336, §7; am L 1988, c 152, §2; am L 1990, c 293, §8; am L 1994, c
202, §8; am L 1996, c 311, §§2, 4; am L 1998, c 104, §§4, 6 and c 118, §§7, 9,
11; am L 1999, c 113, §§2 to 5; am L 2002, c 95, §2; am L 2004, c 229, §2]
