Farm and Aquaculture Alternative Energy Loan

Summary

In July 2008 Hawaii enacted legislation (HB 2261) which created a loan program for agriculture and aquaculture renewable energy projects. Farmers and aquaculturists may receive loans for projects involving photovoltaic (PV) energy, hydroelectric power, wind power generation, methane generation, bio-diesel and ethanol production. Loans may provide up to 85% of the project cost (up to a maximum of $1,500,000) for a term of up to forty years. To be eligible, the applicant must be a qualified farmer or aquaculturist with a sound credit rating and the ability to repay the loan, as determined by the Department of Agriculture.

These renewable energy loans fall into class "H" which carries a 3% interest rate for agriculture. The interest rate for aquaculture projects is 5%. If the money loaned is borrowed by the Department of Agriculture, the interest rate will be the greater of 3% for agriculture and 5% for aquaculture or 1% greater than the State’s cost of borrowing the money. The Department of Agriculture generally funds these loans using existing revolving loan funds rather than obtaining outside funding. These loans bear simple interest on the unpaid principal balance, charged on the actual amount disbursed to the borrower.