Positive Impacts of Loan Program Mitigated by Global Pandemic

To determine the impact an OHA loan program had on the economic self sufficiency of its consumer loan (education, debt consolidation, and home improvement) and business loan borrowers and to explore the continuing effects of this program within the context of a global pandemic and resulting economic crisis.

• 244 OHA loan borrowers
• 157 OHA loan evaluation participants
• Retrospective survey data collection on indicators of borrower financial conditions and economic wellbeing for three points in time:
  • Prior to receiving the loan “Before” (Time 1)
  • “2019” (Time 2)
  • “2020” (Time 3).

Results of the program evaluation point to positive outcomes in borrower’s financial stability during the loan period. Levels of improvement, however, varied between loan types and were, in the end, mitigated by the 2020 statewide economic crisis resulting from the COVID-19 pandemic.

Before the loan, education and debt consolidation borrowers reported lower indicators of overall economic wellbeing, such as financial management and economic fragility, and lower total net worth. On these same measures, however, education and debt consolidation borrowers made the greatest improvement over time. This finding may indicate that if the loan program targets borrowers of less financial stability, greater improvement over time may be achieved.

Additional findings suggest that the loan program is effective in achieving immediate or shorter-term outcomes, such as increasing earning potential and preconditions to financial stability including improvements in debt-to-income ratio (DTI) and credit scores. Longer-term outcomes, such as improving housing conditions and employment, are not detectable in the short timeframe of the loan-term. Therefore, program evaluation should be continued after the term of the loan.

Native Hawaiian businesses appear to benefit greatly from the OHA loan program, demonstrating the highest levels of improvement among most outcomes evaluated. Therefore, the loan program should explore additional means to support and build upon current business loan products.

Overall, the purpose of the loan programs was achieved.

Office of Hawaiian Affairs

Mission: To mālama Hawaiʻi’s people and environmental resources, and OHA’s assets, toward ensuring the perpetuation of the culture, the enhancement of lifestyle and the protection of entitlements of Native Hawaiians, while enabling the building of a strong and healthy Hawaiian people and lāhui, recognized nationally and internationally.

Native Hawaiian Revolving Loan Fund (NHRLF)

Mission: To enhance access for all persons of Native Hawaiian ancestry to credit, capital, and financial services & skills to create jobs, wealth, and economic & social well­-being for all the people of Hawai‘i.

COVID-19

• • Coronavirus disease 2019 (COVID-19) appeared in late 2019.
  • March 23, 2020: O‘ahu’s five-week stay-at-home order went into effect.
  • April 25, 2020: The state extends stay-at-home orders and the 14-day quarantine for travelers until May.
  • Hawaiʻi’s heavy dependency on tourism added to the state’s workforce contraction, leading to the largest per capita number of unemployment insurance claims in the nation for 30 consecutive weeks.
  • Oct 2020: Hawaiʻi’s unemployment rate was the highest in the nation at 14.3 percent compared to 6.9 percent nationwide.

• • • Council on Social Work Education (CSWE). (n.d.). Working Definition of Economic Well-Being. .
    • Consumer Finance Protection Bureau. (2019, November 15). What is a debt-to-income ratio? Why is the 43% debt-to-income ratio important?
    • U.S. Federal Reserve System. (2017). Report on the Economic Well-Being of U.S. Households in 2016 – May 2017.