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How to Get a Small Business Loan in Hawaii
January 28, 2022
How to Get a Small Business Loan in Hawaii

How to Get a Small Business Loan in Hawaii

In December 2020, the UH Economic Research Organization pegged Hawaii’s unemployment rate at 11.6 percent. At the time, it was the second-highest unemployment rate in the nation. In addition, in 2020, Hawaii’s real GDP declined 8 percent.

Despite the recent tumult, a well-positioned small business can still thrive in the state of Hawaii.

Of course, to thrive in Hawaii, small businesses need to finance their growth. While they’re not your only option, small business loans can be a great way to grow your Hawaii-based business.

To help you navigate getting a loan for your business in Hawaii, this post will summarize your loan options. To start, let’s review why you should consider business loans in Hawaii.

Why Should You Consider Business Loans in Hawaii?

There’s no state quite like Hawaii in the United States. Its tropical climate, culture, island geography, and political and regulatory landscape make it unique. The big industries in Hawaii include tourism and hospitality, logistics, military, healthcare, and construction.

Despite the recent downturn, Hawaii’s big industries have remained fairly resilient. So if your business serves the logistics, military, healthcare, or construction industry, business loans can help you do it at higher margins and/or larger scales.

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Types of Small Business Loans in Hawaii

If you’re looking for a business loan in Hawaii, you can expect a wide range of options including:

Small Business Loans

As with every state in the U.S., you can access a commercial business loan program from both traditional and alternative lenders in Hawaii.

If you opt for a traditional lender, consider a local bank. 90 percent of market share in Hawaii is controlled by four banks, all of which are local:

  • First Hawaiian Bank
  • Bank of Hawaii
  • Central Pacific Bank
  • American Savings Bank

If you choose an alternative lender, you can expect to interact with your lender online and over the phone, the same way you would in any other state.

Business Lines of Credit

As with small business loans, both traditional and alternative lenders provide them in Hawaii. The application process for lines of credit is similar to term loans, but their structure is much different.

With a line of credit, the lender agrees to make a certain sum of money available to you that you can draw down at any time. As the borrower, you can borrow as much as you want, up to the predetermined amount. Interest charges, payment sizes and timing, and other rules will be set by the lender.

SBA 7(a) Loans

The SBA’s Hawaii Lender List shows seventeen lenders that provide SBA loans. It’s worth noting, though, that the Small Business Administration (SBA) loans in Hawaii aren’t common.

According to the SBA’s data on lending activity by congressional district, Hawaii’s two districts have ranked in the bottom tenth percentile for the past two years.

Still, that doesn’t mean you can’t obtain and use an SBA loan in Hawaii; these loans have rates that are competitive or better than any other small business loan.

Alternative Financing Options

For certain types of businesses, and smaller businesses in general in Hawaii, there are several additional working capital options. These include:

Merchant cash advances

A predetermined advance of cash that is remitted based on a predetermined percentage of your credit and/or debit card sales. This financing option is fast and available to borrowers without good credit.

Equipment loans

Equipment loans are similar to an auto loan in structure, except they’re meant for business equipment. If you need financing for equipment, these loans are generally more affordable and easier to qualify for than traditional loans.

Business credit cards

Just like a personal credit card, you can use business credit cards to finance smaller, short-term expenses. Remember, though, you’ll pay an APR of (at minimum) 15 percent on any balance you carry. So try to only use credit cards to finance expenses you’ll pay off within the month.

Conclusion: Grow with Hawaii Business Loans

WalletHub’s Best and Worst States to Start a Business places Hawaii at a modest 23rd in the nation. USNews gives the Aloha State slightly worse billing as the 25th best place to start a business.

If you have a strong business and can leverage Hawaii’s unique advantages, you can thrive for years to come. Add a business loan on top of your strategic savvy and your growth might surprise you.

Fora Financial

Editorial Note: Any opinions, analyses, reviews or recommendations expressed in this article are those of the author's alone, and have not been reviewed, approved, or otherwise endorsed by any of these entities.

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Fora Financial is a working capital provider to small business owners nationwide. In addition, the Fora Financial team provides educational information to the small business community through their blog, which covers topics such as business financing, marketing, technology, and much more. If you’d like to see a topic covered on the Fora Financial blog, or want to submit a guest post, please email us at [email protected].