HAR §15-3-3. Capital Access Program

(a) The purpose of the program is to assist lenders in making loans to small and medium-sized businesses and nonprofit organizations that face barriers in obtaining capital. The loan shall be used for a project, activity or enterprise in Hawaii that fosters economic development in Hawaii. The department may use money from the fund to make a deposit in a lender’s reserve account, in an amount specified in this chapter, to be a source of money the lender may receive as reimbursement for losses on loans covered by the reserve account. (b) The department shall determine the eligibility of a lender to participate in the program and may set a limit on the number of eligible lenders that may participate in the program. (c) To participate in the program, an eligible lender shall enter into a participation agreement with the department that sets out the terms and conditions under which the department would make contributions to the reserve account established by the lender and specifies the criteria for a loan to qualify as a capital access loan. (d) To qualify as a capital access loan, a loan shall: (1) Be made to a small or medium-sized business or to a nonprofit organization as defined in this chapter; 3-4 §15-3-3 (2) Be used for a project, activity, or enterprise in Hawaii, that fosters economic development in Hawaii; and (3) Meet any other criteria provided by this chapter or established by the department. [Eff. ] (Auth: HRS §§211D-2 and 211D-4) (Imp: HRS §211D-3) §15-3-4 Provisions and restrictions relating to capital access loans. (a) The lender shall be responsible for determining the recipient, the amount and interest rate of a capital access loan, and the fees and other related requirements related to the loan. (b) When enrolling a loan in the program, a lender may specify an amount to be covered under the program that is less than the total amount of the loan. (c) The maximum loan amount of one or more loans to any single borrower is $1,250,000. (d) The department, in its discretion, may allow a capital access loan to be sold on the secondary market under terms and conditions established or required by the department. (e) A capital access loan may only be used for: (1) working capital, which includes the cost of exporting, accounts receivable, payroll, inventory, and other short-term financing needs of the borrower; or (2) the purchase, construction, or lease of capital assets, including buildings and equipment used by the borrower. (f) A loan will not qualify as a capital access loan if the loan is used for: (1) Construction or purchase of residential housing; (2) Simple real estate investments, excluding the development or improvement of commercial real estate occupied by the borrower’s business or organization; 3-5 §15-3-5 (3) Refinancing of existing loans not originally enrolled under this program; or (4) Insider loan transactions, as defined by the department. [Eff. ] (Auth: HRS §§211D-2 and 211D-4) (Imp: HRS §§21D-3 and 211D-5)