Ka Wai Ola - Office of Hawaiian Affairs, Volume 21, Number 2, 1 February 2004 — OHA set to offer quick micro-loans [ARTICLE+ILLUSTRATION]

OHA set to offer quick micro-loans

Pilot program will loan up to $7,500 for financial emergencies and career development By Sterling Kini Wong In February, OFIA will launeh a micro-loan program offering consumer and emergency loans with a lower interest rate and lower monthly payments than most other financial lending institutions. The 17-month Consumer Revolving Micro-Loan Pilot Program (MLP) is scheduled to run through June 2005, after whieh OHA's Board of Trustees will review the trial program and determine whether or not to extend it. Trustee Boyd Mossman said the program is a good example of "OHA as an organization working to implement new programs that benefit Native Hawaiians." "This is just the beginning," Mossman said. "We will monitor this program ... and, hopefully, it will increase substantially in the future."

The program will provide small loans to pay for financial emergencies such as a death in the family, automobile breakdowns or home repairs. People would also be eligible for MLP loans to pay for career development opportunities, including course instruction, certification programs or required equipment purchase for classes in their current career field. The micro-loans will be limited to $7,500 per individual for a maximum term of five years at a fixed interest rate of five percent. In order to serve the needs of applicants in financial emergencies, the goal of the program is to disburse loans within a week. "We understand that most of the applicants will need this money immediately," said OHA loan officer Dean Oshiro. "If the loan process takes more than a week or two, the emergency will most likely be over." In order to expedite the loan approval process, the MLP staff will use Internet credit reports, whieh ean assess a loan applicant's credit history within minutes. Oshiro said that people usually pay for emergencies or career enhancement opportunities either by using a credit card — with an average interest rate of 16-20 percent — or by taking out a bank loan, with an average interest rate of

10-12 percent. And while credit unions offer loans with relatively low interest rates, he said, their loan terms are shorter. In comparison, Oshiro said, the Micro-Loan Program would be able to offer a lower interest rate and lower monthly payments by increasing the length of the loan's term.

In its first five months, the loan program will be able to disburse up to $500,000 in consumer loans. The Board of Trustees to has yet to determine the amount the pilot program will receive for its remaining 12 months. The program was created to address a gap in the financial services that OHA offers the Native

Hawaiian community. OHA currently supports two programs administered by Alu Like, ine., whieh provide assistance for emergency situations and career development. However, many Hawaiians did not qualify under the two programs. OHA's first attempt to address this gap involved a proposal to form a Native Hawaiian Credit Union. A consultant firm, however, advised OHA that the National Credit Union Administration could reject a Native Hawaiian credit union as possibly raising a racial-discrimina-tion issue. The firm instead recommended that OHA create a microloan program, whieh would not be affiliated with the federal government. The Board of Trustees authorized the MLP in November 2003 and supplied it with two positions — a loan officer in January and an account clerk in July. OHA's Native Hawaiian Revolving Loan Fund staff will facilitate management of the program. All MLP applicants must have their Native Hawaiian ancestry verified by OHA's Hawaiian Registry. For more information on the Micro-Loan Program, contact Consumer Loan Officer Gilbert Fernandes Jr. at 594-1829. ■

'We understand that most of the applicants will need this money immediately. Ifthe loan process takes more than a week or two, the emergency will most likely be over." — Loan officer Dean Oshiro

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