Posted on: Friday, July 30, 2004

OHA to revise loan program

By Vicki Viotti
Advertiser Staff Writer

A three-month-old program for Native Hawaiians has given out more than a quarter-million dollars in "microloans," but now faces a classic barrier: The people most in need of aid are the ones who can't qualify for the loans.

Trustees of the Office of Hawaiian Affairs, sponsors of the program, said at a committee meeting this week that loan restrictions will need to be eased because only about a quarter of the applications got approved.

Dana Hauanio, OHA consumer loan supervisor, told the Beneficiary Advocacy and Empowerment Committee that most rejected applicants were turned down because their credit rating was too low and they were unable to demonstrate an ability to repay.

The loans were created using OHA trust funds to offer aid to Native Hawaiians who find themselves in temporary financial hardship because of a death in the family, vehicle breakdowns, home repairs or other emergencies. The loans also could be used to pay for career-development opportunities, including courses, certification programs or for purchasing equipment required for classes in their current career field.

OHA trustees in November approved the Consumer Revolving Micro-Loan Pilot Program, setting aside $500,000.

By June 30, $263,967 in loans had been approved, with most of the money already disbursed, Hauanio said.

However, she said, only 53 of the 229 who completed applications received loans.

Applications were reviewed using credit-rating criteria that had been lowered from the more common industry levels, Hauanio said. But because the effort is a pilot program, the agency was unsure where to set the standard.

OHA plans to continue the loan program under the current setup until the money runs out, she said. Then the staff will return to the trustees with recommended revisions.

During the public-forum segment of the meeting, OHA beneficiary Umililoa Sexton praised the idea of the loan program but said the shortcomings should have come as no surprise.

"Most of the people on the homesteads won't even try to get the loan because they're afraid of their credit rating," Sexton said. "We need something to help them rebuild their credit."

The maximum amount for the loans is $7,500, issued at a 5 percent fixed interest rate over a five-year term. Monthly payments would be no more than $141.

Applicants must provide proof of Hawaiian ancestry through a copy of their birth certificate or through OHA's Hawaiian Registry Program.

For more information, call 594-1829.

Reach Vicki Viotti at vviotti@honoluluadvertiser.com or 525-8053.