§15-24-41  Purpose.  The purpose of this section is to provide rules governing implementation of the Kakaako relocation loan program authorized by §206E-10.5, Hawaii Revised Statutes.  [Eff 2/11/91] (Auth:  HRS §§206E-4, 206E-10.5) (Imp:  HRS §§206E-4, 206E-10.5)
 

 §15-24-42  Purpose of loans.  The authority may make loans to displaced small businesses for the purpose of financing certain moving expenses, reestablishment expenses, capital improvements, or other reasonable and necessary expenses resulting from being displaced from its place of business within the Kakaako community development district.  The intent of loans is to mitigate the expenses and impacts to small businesses that are displaced from the Kakaako community development district because of the redevelopment activities therein.  [Eff 2/11/91] (Auth:  HRS §§206E-4, 206E-10.5) (Imp:  HRS §§206E-4, 206E-10.5)
 

 §15-24-43  Types of loans.  The authority may make direct loans or participation loans made in conjunction with loans made by other financial institutions, including the SBA.  [Eff 2/11/91] (Auth:  HRS §§206E-4, 206E-10.5) (Imp:  HRS §§206E-4, 206E-10.5)
 

 §15-24-44  Eligibility requirements.  Consideration for loans under this section shall be extended only to applicants who meet the following requirements:
 (1) The applicant is a small business registered to do business in the State;
 (2) The applicant furnishes information to show that the applicant has the ability to repay the loan out of income from the business;
 (3) The applicant shall have enough equity invested or to invest so that if the loan is approved, it can be repaid in a timely manner;
 (4) Adequate collateral may be required to reasonably protect the State's interest.  The amount of collateral needed, considered along with other credit factors, is determined on a case-by-case basis;
 (5) The purpose of the loan is in conformity with provisions of §15-24-42;
 (6) The applicant plans to relocate from its current location within the Kakaako community development district and reestablish elsewhere within the State of Hawaii; and
 (7) The applicant has been at its current location for at least one year prior to the date of the application for loan; or if less than one year, had been located within the Kakaako community development district for at least one year immediately prior to its current location.  [Eff 2/11/91] (Auth:  HRS §§206E-4, 206E-10.5) (Imp:  HRS §§206E-4, 206E-10.5)
 

 §15-24-45  Application procedure.  (a)  All loan applications shall be submitted on forms provided by the authority.
 (b) All financial statements submitted by an applicant shall show the applicable date of the information given and shall be signed and certified by the proprietor, partner, or public accountant.  The authority may require that financial statements accompanying applications include balance sheets and profit and loss statements for the past five tax years and a year-to-date interim financial statement dated no later than 90 days of application date.  [Eff 2/11/91] (Auth:  HRS §§206E-4, 206E-10.5) (Imp:  HRS §§206E-4, 206E-10.5)
 

 §15-24-46  Consideration and review of applications.  (a)  The authority shall not approve a loan unless the applicant provides reasonable assurance that the loan can and will be repaid pursuant to its terms.  Reasonable assurance of repayment shall be based upon consideration of the applicant's record of past earnings or projections of future earnings which indicate that the applicant will be able to repay the loan from the income of the business.
 (b) The authority may disapprove the loan for any of the following reasons:
 (1) the purpose of the loan does not conform with the provisions of §15-24-42;
 (2) The applicant cannot meet certain practical credit requirements established by the authority;
 (3) The applicant's  character or financial capability is questionable as determined by the authority; or
 (4) The applicant fails to meet other basic criteria deemed necessary in justifying or granting a loan.
 (c) Applications meeting the requirements of this chapter shall be reviewed by the staff of the authority or its designated representative for its recommendation before final approval or disapproval by the executive director.  This relocation loan program may be administered by the authority or its designated representative, which may include the department of Business, Economic Development & Tourism, or a financial institution.
 (d) An applicant shall not be required to pay any fees in connection with filing an application, but shall be required to pay for such costs as appraisals, title searches, documentation of mortgages, and any other work required in processing the loan which is not performed by the authority.  When deemed necessary by the authority, an applicant shall be responsible for hiring independent appraisers to determine the value of capital assets or to assess the economic feasibility of a business operation.  [Eff 2/11/91] (Auth:  HRS §§206E-4, 206E-10.5) (Imp:  HRS §§206E-4, 206E-10.5)
 

 §15-24-47  Preferences and priorities in granting loans.  In granting loans, the authority may grant preference to small businesses, first, that are displaced as a result of governmental action, second, that are displaced as a result of private redevelopment action approved by the authority and third, that are displaced for other reasons.  The authority shall also be guided by the specific condition and needs of the business, including the degree of financial hardship that relocation would place on the business and its possible inability to obtain a conventional loan for this purpose from other financial institutions or governmental agencies.  [Eff 2/11/91] (Auth:  HRS §§206E-4, 206E-10.5) (Imp:  HRS §§206E-4, 206E-10.5)
 

 §15-24-48  Maximum loan amount; loan terms and restrictions.  (a)  A loan to any one applicant shall not exceed $50,000.  For loans exceeding $25,000, the authority shall require greater assurances that the loan will be repaid on a case-by-case basis.
 (b) Loans shall not be made for relocation or reestablishment expenses for which the applicant receives payments or compensation from the authority or other governmental agency.  No applicant shall have more than one active loan at a time.
 (c) The executive director shall determine the extent and kinds of security required for each loan.  When loans are secured, such security may be subordinated to loans made by financial institutions.  The applicant shall execute any promissory note, mortgage, loan agreement, or other agreement as may be required by the authority.
 (d) No loan shall be granted for a period exceeding twenty years.  Loans shall be for periods determined by the authority and based upon the security for the loan, the financial capability of the applicant, and other lending practices.
 (e) Interest on loans shall be set at the prime interest rate as published in the Wall Street Journal at the date of closing or at a rate of seven and one-half per cent a year, whichever is lower, provided, the total interest paid by an applicant for a loan shall not be less than the loan servicing fees paid by the authority to third parties at the time of loan closing.
 (f) The executive director shall determine the commencement date for the repayment of the first installment.  The executive 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 three years from date of issuance of the loan.
 (g) The executive director may defer the interest on the principal of a loan, but in no event shall interest payments be deferred in excess of one year from the date of issuance of the loan.  [Eff 2/11/91, am 2/22/93] (Auth:  HRS §§206E-4, 206E-10.5) (Imp:  HRS §§206E-4, 206E-10.5)
 

 §15-24-49  Inspection of premises and records. The authority shall have the right to inspect, at reasonable hours, the plant, physical facilities, equipment, premises, books, and records of any business either in connection with the processing of a loan application or in the administration of a loan granted to that business.  [Eff 2/11/91] (Auth:  HRS §§206E-4, 206E-10.5) (Imp:  HRS §§206E-4, 206E-10.5)
 

 §15-24-50  Annual reports required of borrowers; interim reports.  During the life of a loan, each borrower shall submit to the authority, annually, financial reports consisting of a balance sheet and profit and loss statement on either a fiscal year or calendar year basis, depending on the tax reporting period of the borrower.  These reports shall be submitted no later than four months after the close of the applicable tax period.  The authority may require the filing of interim financial statements and reports and the submission of progress and final reports relating to any aspects of the business.  [Eff 2/11/91] (Auth:  HRS §§206E-4, 206E-10.5) (Imp:  HRS §§206E-4, 206E-10.5)
 

 §15-24-51  Default.  (a)  Loans that are three installments in arrears shall be considered in default.  The borrower shall also be considered to be in default for failure to comply with any term or condition of the loan authorization, loan agreement, or mortgage.  If the borrower is in default, the entire balance plus accrued interest, at the option of the executive director, shall become due and payable.  The executive director may foreclose any mortgage by any method provided by law.  Any expense incurred by the authority for recovering of monies shall be borne by the borrower.
 (b) Loans in default shall be referred to the state attorney general for collection and action if the authority is not able to obtain payment.  [Eff 2/11/91] (Auth:  HRS §§206E-4, 206E-10.5) (Imp:  HRS §§206E-4, 206E-10.5)