HAR §15-3-5. Reserve account

(a) Upon approval by the department after entering into a participation agreement, a lender making a capital access loan shall establish a reserve account. The reserve account may only be used to cover losses arising from a default of a capital access loan made by the lender under this chapter or as otherwise provided by this chapter. (b) When a lender makes a loan enrolled in the program, the lender shall require the borrower to pay the lender a fee not less than two percent (2%) but not more than three percent (3%) of the principal amount of the loan, which is deposited into the reserve account. The lender shall also deposit in the reserve account an amount equal to the amount of the fee received by the lender from the borrower under this subsection. The lender may recover from the borrower all or part of the amount the lender is required to pay in any manner agreed to by the lender and borrower. (c) Within ten (10) working days of the loan origination date of each capital access loan, the lender shall certify to the department that the lender has made a capital access loan, the amount the lender has deposited in the reserve account, including the amount received from the borrower, the number of jobs created or affected by the loan and, if applicable, that the borrower is an enrolled enterprise zone business under chapter 209E, HRS, or operates a child care facility or adult residential care home, and any other information applicable to capital access loans the department may require or request. 3-6 §15-3-5 (d) Upon satisfactory receipt of a certification made under subsection (c), the department will deposit in the lender’s reserve account for each capital access loan made by the lender: (1) An amount equal to the amount deposited by the lender for each loan if the lender: (A) Has assets of more than one billion dollars ($1,000,000,000); or (B) Has previously enrolled loans in the program that in the aggregate are more than two million dollars ($2,000,000); (2) An amount equal to one hundred fifty percent (150%) of the total amount deposited under subsection (b) for each loan if the lender is not described by paragraph (1); or (3) Notwithstanding paragraphs (1) and (2), an amount equal to two hundred percent (200%) of the total amount deposited under subsection (b) for each loan if: (A) The borrower is an enrolled enterprise zone business under chapter 209E, HRS; or (B) The borrower is a small or medium-sized business or a nonprofit organization that operates or proposes to operate a childcare facility or adult residential care home. [Eff. ] (Auth: HRS §§211D-2 and 211D-4) (Imp: HRS §211D-6) §15-3-6 Limitations on department contribution to reserve account. (a) The amount deposited by the department into lenders’ reserve account for any single loan recipient may not exceed $100,000 during a three-year period. (b) The maximum amount the department may deposit into a reserve account for each capital access loan made under this chapter is the lesser of $35,000 or an amount equal to: (1) Eight percent (8%) of the loan amount if: 3-7 §15-3-7 (A) The borrower is an enrolled enterprise zone business under chapter 209E, HRS; or (B) The borrower is a small or medium-sized business or a nonprofit organization that operates or proposes to operate a child care facility or adult residential care home; or (2) Six percent (6%)of the loan amount for any other borrower. [Eff. ] (Auth: HRS §§211D-2 and 211D-4) (Imp: HRS §211D-7) §15-3-7 State’s rights with respect to reserve account. (a) All of the money in a reserve account established under this chapter is property of the State. (b) The State is entitled to earn interest on the amount of contributions made by the department, borrower, and lender to a reserve account under this chapter. The department shall withdraw monthly or quarterly from a reserve account the amount of the interest earned by the State. The department shall deposit the amount withdrawn under this section into the fund. (c) If the amount in a reserve account exceeds thirty-three percent (33%) of the balance of the lender’s outstanding capital access loans, the department may withdraw the excess amount and deposit the amount in the fund. A withdrawal of money authorized under this subsection may not reduce an active reserve account to an amount that is less than $200,000. (d) The department shall withdraw from the reserve account the total amount deposited in the account and any interest earned on the account, and deposit the amount in the fund when: (1) A lender is no longer eligible to participate in the program or a participation agreement entered into under 3-8 §15-3-7 this chapter is terminated without renewal by the department or the lender; and (2) The lender has no outstanding capital access loans. [Eff. ] (Auth: HRS §§211D-2 and 211D-4) (Imp: HRS §211D-8)