HAR §15-120-8. §15-120-8 Purpose of loans

(a) The department may make commW1ity­ based enterprise establishment and improvement loans for the start-up costs, purchase, or improvement ofa community-based enterprise, and for working capital, and for the purchase, constmction, or improvement offacilities. (b) The depa1iment may also make operating loans to caITy on or improve an existing commW1ity-based enterprise for the purchase ofequipment, and for production and marketing expenses including materials, labor, and services. (c) Loans shall not be made where the direct or indirect purpose or result would be to: (1) Pay offa creditor or creditors ofthe applicant who are inadequately secured and are in a position to sustain a loss; (2) Provide funds, directly or indirectly, for payment, distribution, or as a loan to owners, pm1ners, or shareholders ofthe applicant's business, except as ordinary compensation for services rendered; (3) Effect a change in ownership ofa business, unless the change shall promote the sound development or preserve the existence ofthe business; (4) Provide or free funds for speculation in any kind ofprope11y, real or personal, tangible or intangible; (5) Provide funds to an applicant to engage in the business oflending or investing money; (6) Finance the acquisition, constmction, improvement, or operation of real property which is to be held primarily for sale or investment; provided that this prohibition shall not apply to a loan for the remodeling, maintenance, or improvement (including expansion) ofexisting commercial or industrial structures already held by the applicant for rental or for use as an essential pa11 ofan ongoing business; or (7) Encourage monopoly or be inconsistent with generally accypted practices ofthe American system of free enterprise. [Eff MAY 1p W2ij (Auth: HRS §210D-8) (Imp: HRS §§210D-8 and 210D-9)