On Monday we met with Rebecca Soon, CEO of Soultions Pacific. She is by far the most knowledgeable person I have encountered with respect to micro-lending in Hawaii. She used to be in charge of Economic Development programs at Pacific Gateway Center. She's also been contracted to provide Technical Assistance (TA) for the Office of Hawaiian Affairs Malama Loan Program. She mentioned that the OHA Loan program has very subjective criteria that look for five key attributes: FICO score, number of credit inquiries, amount of credit on each account, debt to equity ratio, and one other.
PGC, by contrast, will fund people who have no credit rating due to their refugee status. They have a community review board— usually two lenders and one business person— which assesses each loan application.
Ms. Soon highlighted that there is a direct correlation between the amount of technical assistance received by a borrower and their success in repaying the loan. The higher the risk of the client, the higher the amount of technical assistance needed.
She also told us about Individual Development Accounts that incentivize saving for low income borrowers. The money can be used for business, education, and home ownership, and all funds saved will be matched by participating banks.
A potential partnership for us could be the Maui Economic Opportunity Business Development Corporation. They make loans as low as $500 and as high as $10,000 for similar goals that we are proposing. They offer business planning classes, taught by the MEO BDC CEO Susie Thieman who was named Minority Small Business Champion of the Year for Maui County in 2006 by the U.S. Small Business Administration (SBA), and in 2009 the SBA named her the Financial Services Champion for Maui County. Quite a model for us to follow.
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