HAR §15-2-9. Maximum loan amount; loan terms and restrictions

(a) 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 with a private financial institution. (b) Direct and participating loans to any one applicant shall not exceed $1,000,000 in state funds. (c) The director shall determine the extent and kinds of security required for each loan. When loans are secured, such security may be subordinated to direct loans made by financial institutions. (d) No loan shall be granted for a period exceeding twenty years. The following guidelines shall be used by the department is setting loan terms; (1) Working capital loans shall in most instances be for a maximum of six years; (2) Loans to purchase fixed assets, including land, construction, etc., may be for periods up to a maximum of twenty years, but normally shall be ten years. (e) Each loan shall bear a simple interest at a rate 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 is determined on January 1 and July 1 of each year by the rate charged by the two largest banks in the State of Hawaii identified by the Department of Commerce and Consumer Affairs division of financial institutions. Should there be a difference in rate charged by the Institutions, the lower of the two shall be utilized. (f) The director shall determine the commencement date for the repayment of the first installment. The director may defer the initial payment on the principal of a loan, but in no event shall the principal payments be deferred in excess of five years from date of issuance of the loan. (g) The director may defer the interest on the principal of a loan, but in no event shall interest payments be deferred in excess of two years from the date of issuance of the loan. [Eff. 7/6/81; am and comp DEC 21 1989] (Auth: HRS §210-4, §210-5) (Imp: HRS §210-5).