§210-6  Direct loans, terms, andrestrictions.  (a)  The department of business, economic development, andtourism may make loans to small business concerns for the financing of plantconstruction, conversion, expansion, the acquisition of land for expansion, theacquisition of equipment, machinery, supplies, or materials, or for thesupplying of working capital.  The department may also make loans to assistbusinesses located in communities near military installations to developinfrastructure to minimize the possibility of or assist in the mitigation ofthe adverse effects of the closure or reduction in capacity of a militaryinstallation.  The loans may be made in conjunction with loans made by otherfinancial institutions, including the Small Business Administration.  Where theloans made by the department are secured, the security may be subordinated tothe loans made by other financial institutions, when the subordination isrequired to obtain loans from such institutions.  The necessity for and the extentof security required in any loan shall be determined by the director ofbusiness, economic development, and tourism.

(b)  The department may make loans to businessconcerns located in a county with a population of less than 150,000; providedthat the interest on loans made under this subsection shall bear simpleinterest at the rate of three per cent below the prime rate or at a rate offive and one-half per cent a year, whichever is lower.  For purposes of thissubsection, 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 Hawaiiidentified by the department of commerce and consumer affairs.  Should there bea difference in rate charged by the institutions, the lower of the two shall beused.  Payments required under loans made under this subsection may bedeferred, but no loans made under this subsection shall be forgiven.

(c)  Except as may be expressly providedotherwise for loans made under subsection (b), the foregoing powers shall besubject to the following restrictions and limitations:

(1)  No loans shall be granted unless financialassistance is not available to the applicant.  The condition may be waived bythe director for participation loans or loan guarantees with a privatefinancial institution;

(2)  The amount of the loan or loans to any oneapplicant 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 twentyyears;

(4)  Within counties of a population exceeding150,000, each loan shall bear simple interest at a rate of one per cent belowthe prime rate or at a rate of seven and one-half per cent a year, whichever islower.  For purposes of this paragraph, the prime rate shall be determined on thefirst day of each month, and shall be the rate charged by the two largest banksin the State identified by the department of commerce and consumer affairs. Should there be a difference in rate charged by the institutions, the lower ofthe two shall be used;

(5)  The commencement date for the repayment of thefirst installment on the principal of each loan may be deferred by thedirector, but in no event shall such initial payment be deferred in excess offive years; and

(6)  The payment of interest on the principal of aloan may be deferred by the director, but in no event shall interest paymentsbe deferred in excess of two years from the date of issuance of the loan.

(d)  Except as may be expressly providedotherwise for loans made under subsection (b), any restriction or limitation insubsection (c) may be waived at the director's discretion where the applicantis a reuse or recycling business that meets the following criteria:

(1)  The business has potential to have an impact onoverall solid waste reduction and achievement of the State's reduction goals;

(2)  The business addresses the alternative managementof wastes identified by the solid waste disposal facility operators asproblematic;

(3)  The business maximizes economic benefits throughimport 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 reflectsdetailed and justifiable expenses and revenues, shows potential for profit, andan ability to meet market demand for end products.

(e)  The department may contract with anyfinancial institution for services including servicing or administering loanspursuant to this section.

(f)  For purposes of this section,"financial institution" means any organization authorized to dobusiness under state or federal laws relating to financial institutions,including without limitation, banks, savings banks, savings and loan companiesor 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, c243, §1 and c 336, §7; am L 1988, c 152, §2; am L 1990, c 293, §8; am L 1994, c202, §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]

 

Cross References

 

  Clean Hawaii fund, see §201-106.