Ka Wai Ola - Office of Hawaiian Affairs, Volume 20, Number 9, 1 September 2003 — Administration for Native Americans commissioner affirms partnership with OHA's revolving loan fund [ARTICLE+ILLUSTRATION]

Administration for Native Americans commissioner affirms partnership with OHA's revolving loan fund

By Sterling Kini Wong In response to community concerns raised by recent media reports, Administration for Native Americans (ANA) Commissioner Quanah Stamps emphasized during a late-August visit to Honolulu that the partnership between the ANA and OHA's Native Hawaiian Revolving Loan Fund (NHRLF) remains intact, and that the partnership's intent of Native Hawaiian entrepreneurial development has not changed. Contrary to loeal news reports, the ANA never considered asking for the return of grant monies allocated to NHRLF, Stamps said following a meeting with several OHA trustees and NHRLF staff on Aug. 25. Loan-fund administrators pointed out that the NHRLF was not cut off from the $1 million in annual federal funding it had previously received from the ANA, as had been reported. Rather, when the previous ANA grant expired at the end of Septmber 2002, OHA chose not to reapply for the grant. "As a result of the amount of funds currently available for loans, NHRLF decided not to request additional capital from ANA," a statement released by the fund said. Since the programs' ineephon in 1988, NHRLF has received $12.9 million from ANA. The fund currently has a total capital halanee

of approximately $21 million, whieh includes matching funds from OHA. The NHRLF provides entrepreneurial training, assistance and lending to Native Hawaiian-owned businesses that have failed to acquire loans from at least two lending sources. The purpose of the program is to expand business ownership and employment opportunities for Native Hawaiians. In the last 15 years, the fund has disbursed 357 loans totaling 15.7 million dollars, while writing off 63 as uncollectable. The program received approval from an independent evaluation completed for OHA in July. SMS, a Honolulu-based consulting firm, recommended that OHA eonhnue to support the program because it meets OHA's goals. "[NHRLF] has supported Native Hawaiians throughout the state in their attempts to improve their eeonomie well-being," SMS said in its evaluation. "It has provided eeonomie education to a large number of participants, and it has helped to create jobs at a reasonable cost." SMS also recognized that the NHRLF board and staff have worked to improve the program, whieh had been criticized for having lax management, high default rates and low loan volume. Responding to such concerns, NHRLF Loan Officer Dana Hauani'o said that last-resort loan

programs such as NHRLF are highrisk in nature and will tend to have high delinquency rates, "thus our delinquency rate should not be eompared to other financial institutions." In the past, the program disbursed loans more liberally, but as a result delinquency rates were high. To help lower these rates, the board, whieh approves the loans, began scmtinizing applications more cautiously.

In addition, NHRLF Loan Officer Dean Oshiro pointed out that the program's low loan volume is partially due to restrictions that plaee a $75,000 ceiling on loans, coupled with ANA's expectation that the fund lend out a total of $2 million a year. "It takes 27 loans at $75,000 eaeh to lend out to $2 million," Oshiro said. ANA has denied OHA's request to increase loan amounts to $250,000. Two years ago, Hauani'o said, program officials realized that loans alone could not create sustainable business and decided to expand its services to include education and training for entrepreneurs. In fiscal year 2002, NHRLF spent $175,000 on training and technical assistance, more than triple the amount spent in fiscal year 2001. In its 15-year history, the NHRLF has provided business training to more than 4,000 beneficiaries while creating 1,000 jobs. The program now requires all applicants to prepare a detailed business plan in order to be funded and recommends that they complete an entrepreneurship class. Oshiro said that training and technical assistance allows beginning entrepreneurs to see if it is feasible for them to start a business." A lot of people decide that they're not ready for the loan, Oshiro said. "We're not in this business to put people who are not ready to receive loans into debt." ■

Pā'oihana v mhhwiiim™

NHRLF's 2003 Small Business of the Year Award winner Kawehi lnaba, owner of Mokulele Flight Service in Kona is presented a plaque from OHA Administrator Clyde Nōmu'o (top photo). Below, the NHRLF staff.