How to Get a Small Business Loan in Hawai’i

Dec 1, 2024

Starting or growing a small business in Hawai’i can be a dream come true. Whether you’re launching a beachfront café, a tech startup, or a cultural tour company, securing funding is often a critical step. Understanding the process for obtaining small business loans in Hawai’i can set you up for success in this unique and vibrant marketplace.

In this guide, we’ll break down everything you need to know about small business loans in Hawai’i, including types of loans, eligibility requirements, and tips to improve your chances of approval.

Contact the Hawai’i Small Business Development Center for guidance and help finding the right financing options for your business.


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Types of Small Business Loans Available in Hawai’i

Hawai’i-based entrepreneurs have access to a variety of loan options. Here’s an overview of the most popular choices:

1. SBA Loans
Through traditional banks, the U.S. Small Business Administration (SBA) offers loan programs tailored to small businesses. Popular options include:

  • SBA 7(a) Loan: Ideal for working capital, equipment purchases, or business expansion.
  • SBA Microloans: Smaller loans (up to $50,000) for startups or small businesses needing less capital.
  • SBA 540 capital/property loans
  • SBA Disaster Loans: Support for businesses impacted by natural disasters

2. Traditional Bank Loans & Credit Union Loans
A few Hawaiian banks offer small business loans with competitive interest rates. These are ideal for businesses with strong credit histories. The Hawai’i Small Business Development Center has developed relationships with local and mainland banks that specialize in small business loans.

3. Alternative Financing Options

  • Lines of Credit: Great for managing cash flow.
  • Merchant Cash Advances: Short-term funding repaid through a percentage of daily sales.
  • Grants: Non-repayable funds offered by local organizations and state initiatives.

 

Steps to Apply for a Small Business Loan in Hawai’i

1. Determine Your Funding Needs
Start by identifying why you need a loan and how much funding you’ll require. Being clear about your goals will help you choose the right loan type.

2. Check Your Credit Score
Your personal and business credit scores are key factors lenders consider. Aim for a score of 680 or higher to qualify for traditional loans.

3. Contact the Hawai’i Small Business Development Center for guidance and help to prepare your documentation.

Most lenders will ask for:

  • A detailed business plan
  • Financial statements (profit and loss, balance sheet)
  • Tax returns (personal and business)
  • Bank statements
  • Legal documents (licenses, permits, or leases)


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Tips to Improve Your Chances of Approval

  • Build a Strong Business Plan: Clearly outline your goals, market analysis, and financial projections.
  • Improve Your Credit: Pay down debt and resolve any errors on your credit report.
  • Show Cash Flow: Demonstrate that your business generates enough income to repay the loan. Note: your tax returns need to show profitability and enough cashflow to service the loan payments.
  • Start Small: If you’re a new business owner, consider starting with a home equity line or microloan to build credibility.

 

Why Consider a Small Business Loan in Hawai’i?

Hawai’i offers a distinct business environment, with its mix of tourism-driven industries, local markets, and sustainable business opportunities. A small business loan in Hawai’i can help you:

  • Cover startup costs
  • Expand your operations
  • Invest in equipment or technology
  • Manage cash flow during seasonal fluctuations

Loans are also a great way to build your business credit, which can open doors to larger funding opportunities in the future.

Final Thoughts

Securing a small business loan in Hawai’i requires preparation, but the payoff can be significant. With access to capital, you can grow your business and contribute to Hawaii’s local economy. Whether you choose a traditional bank loan, an SBA loan, or an alternative lender, make sure to do your research and align your funding strategy with your business goals.

Ready to take the next step? Contact the Hawai’i Small Business Development Center and get free 1:1 business advising.