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Hawaii's COVID-19 Economy Creates Capital Challenges

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Casey Harlow / HPR
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Hawaii’s struggling “COVID economy” could be an opportunity for some. But it requires the ability to put together some capital to invest — and that kind of money can be hard to come by in Hawaii.

PBN sat down with industry leaders in banking, venture capital, economics and community lending to talk about the prospects for Hawaii and its economic recovery. Access to capital could make a huge difference, but historically, Hawaii has not made it easy for entrepreneurs to borrow money to get started. While many small businesses have gone under, or have been put up for sale, the people with the drive and talent to acquire these businesses and try to turn them around have few options to get the financing to do so.

Said Dustin Sellers, founding partner at Koa Capital, “There is not a good entrepreneurial funding environment here for situations like this. The ability to find capital that exists so profoundly in other states does not exist here — and there isn’t an impetus for it to exist here.”

Part of the challenge is that Small Business Administration loans or business loans from banks are asset based, while Hawaii’s economy is based more on services. That means there isn’t a lot that entrepreneurs can use as collateral.

Microlending is one concept that could help. This, too, has yet to take off in Hawaii but providing microlending could be an opportunity for those with capital in Hawaii to lend it in small doses. Otherwise, our experts say, a tried-and-true Hawaii method remains one of the best ways of getting started as an entrepreneur — forming up a hui with family and friends to split the cost of getting started.

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