Native Hawaiians will be able to receive loans for home improvement and educational uses, as well as business opportunities, under a restructured Native Hawaiian Revolving Loan Fund that took the Office of Hawaiian Affairs more than a year to iron out.

OHA's new Malama Loan Program was announced yesterday. Administered through First Hawaiian Bank, it will offer five-year, 5 percent loans of up to $75,000 for eligible consumers and businesses.

There is about $24 million available in the fund, which has loaned about $18 million to hundreds of Hawaiian entrepreneurs during 18 years of existence. Monies for the program are provided by OHA and the federal Administration for Native Americans.

In recent years, the revolving fund has come under criticism for a high default rate. A recent OHA audit showed that about half of the agency's revolving fund loans, or more than $3.3 million, were in default while 20 more were delinquent.

The ANA, which has contributed roughly 60 percent of the funds, cut off a $1 million annual allotment in 2002 because of a high default rate. OHA officials also worried for a time that the agency would be forced to return up to $11 million in money that had not been loaned. The ANA also called on OHA to add more loan products, reduce loan approval processing time and serve Native Hawaiians as a lender of first resort.

Before 2004, the revolving fund was available only to those who had been turned down by two lending institutions, a policy which OHA officials said helped contribute to a high default rate.

To address the problems, OHA worked with federal officials, who urged the group to broaden eligibility requirements and speed up the loan process. Loans are expected to be approved and disbursed within five days for eligible applicants. Handing off administration of the revamped program to First Hawaiian Bank as a third-party "strategic lending partner" was also a key change.

Under the new format, the Native Hawaiian Revolving Loan Fund Board of Directors will retain loan approval authority.

ANA Commissioner Quannah Stamps approved the loan fund's new structure.

"Achieving a strong and vibrant Hawaiian people and nation requires successful enterprise and participation in economic and commercial activity while opening opportunity to infuse Hawaiian culture, values and world view into these initiatives," said OHA Chairwoman Haunani Apoliona.

Mark Glick, OHA's economic director, said the revamped program took more than a year to hash out because of procedural requirements set down by ANA which needed to be dealt with. "When we came up with the restructured plan, they asked us to do some things that we don't normally do," Glick said. "It was an arduous process."

For information on the Native Hawaiian Revolving Loan Fund and the Office of Hawaiian Affairs' Malama Loan Program, call OHA economic development director Mark Glick at 594-1911.

Reach Gordon Y.K. Pang at gpang@honoluluadvertiser.com.