Jack Manini, owner of Quality Electrical Services LLC, was in a quandary.

He needed to have $20,000 available to buy light fixtures for a commercial construction job he is bidding for on the Nanakuli-Waianae coast, but he didn’t have the funds.

So he came up with two plans.

One was to seek out a U.S. Small Business Administration 7(a) Express Loan for $50,000. His backup plan was to take out a $125,000 home equity line of credit on his Kaimuki home — where his business is based — in case he couldn’t qualify for the SBA loan.

Manini ended up receiving both the home equity line and the SBA loan through business loan officer Kathy Higa of Central Pacific Bank’s Kahala branch. Although he received only $25,000 of the $50,000 SBA loan he had been seeking, it was enough to give him the money needed for the construction project.

"It was very important," he said of the SBA loan he obtained less than two weeks ago. "If I had not gotten it, I may not have had the money to do work like this as a small business. You need that kind of money somewhere so you can buy materials and pay your payroll. I’m hoping I don’t have to do anything with the home equity loan, but if the SBA loan is insufficient, then I have a pot of money I could go to."

While tourism may be the engine powering the state’s economic recovery, construction is leading the way among small-business loans in Hawaii.

Construction accounted for $10 million, or about one-fifth, of the $49.6 million in 7(a) and 504 loans that the SBA Hawaii District backed from the start of its fiscal year on Oct. 1, 2011, through Aug. 10 of this year. The 47 construction loans also represented the most of any sector of the 292 loans overall during the same period.

Unlike housing developments or big commercial projects such as shopping centers and hotels that would require loans of hundreds of millions of dollars, SBA loans to small businesses in the construction industry typically could be used for such things as purchasing a building or heavy equipment, or simply for working capital.

"The fact that the top sector is construction, followed by the hospitality industry, is a great sign for Hawaii and the economy because both those sectors were really hard hit during the recession," said Elizabeth Echols, regional administrator for the U.S. SBA’s Region IX. "The fact that both of them are leading the other sectors, I take that as a very good sign."

Manini, a licensed electrical contractor for 28 years, started his business in 2004. He has three to five employees depending on the workload.

He said it took about six weeks to get the home equity line that he received in July. The SBA revolving loan took about 10 weeks, he said.

"That is a small project," Manini said of the money needed for the job on the Nanakuli-Waianae coast. "For some projects, the materials are more than $100,000. So the type of project you get involved in will determine how much working capital you need to be competitive to get that project. Once you put in your proposal to the prime contractor or the government, you’re saying you can perform already. You would be reneging on your proposal if you didn’t follow through with that."

Manini’s SBA Express Loan is backed by a 50 percent federal guarantee in which SBA will pay for half of the outstanding balance if there is a default. The SBA typically guarantees 75 percent to 85 percent of a loan, but the Express Loan, which has a lower guarantee, is popular among small businesses and many lenders because of the ease of use, the flexibility and the quicker access to money for applicants.

"The 50 percent guarantee that is offered for the Express program is available to an SBA-approved lender who is knowledgeable about how to use the SBA program and has a good track record so, in the right circumstances, they can turn the loans around a lot quicker for their customer," said Jane Sawyer, district director of SBA’s Hawaii District office. "The lenders use their underwriting and their own forms instead of sending it to SBA processing centers."

SBA loans can range up to $5 million, but the majority of loans are for considerably less than that. The average loan size in the Hawaii District so far this fiscal year ending Sept. 30 is $171,000, Echols said. Hawaii ranks 28th out of 68 district offices this fiscal year for the number of loans granted of less than $150,000, and 30th out of 68 for the amount of money loaned.

The Hawaii District includes Hawaii, Guam, Commonwealth of the Northern Mariana Islands, American Samoa, Republic of the Marshall Islands, Federated States of Micronesia and the Republic of Palau. Region IX includes the Hawaii District plus California, Arizona and Nevada.

For the first six months of calendar year 2012, the Hawaii District approved 151 loans worth $24.8 million compared with 135 loans worth $20 million during the same period in 2011.

"People are starting to feel more confident about the economy and growing their businesses," Echols said. "We’re seeing more people coming in and requesting loans and getting those loans successfully."

Sawyer said it’s all about cash flow for small businesses.

"Having access to capital for small businesses is critically important, so to know that there are a variety of programs to meet their entire range of needs through a 7(a) or 504 loan is critically important, particularly when credit is still tight and the economy is still uncertain. So we’re glad to see so many banks participating in our programs and that small businesses have a place to go."

To get a loan, a business needs to approach a bank that is one of SBA’s lending partners. Most banks want to see a business that has been profitable for a couple of years, Echols said. Interest rates are based on the amount and term of the loan, generally ranging from 2 1/4 to 4 3/4 percentage points over prime, she said. With prime today at 3 1/4 percent, she said current interest rates for most SBA loans are around 5 percent to 8 percent.

Manini said the rate he received on his 7(a) revolving loan was 2.99 percent for the first year and 7 percent after that.

"A lot of your chances for getting the loan depends on your credit score and your credit history," Manini said. "It’s not so much how much you’re worth or how much collateral you have but how strong is your credit."

Before approaching a lender, though, Echols said business people looking for capital should talk to the SBA so they can be prepared.

"The SBA will help them put their financial package together so they can make their best case to a lender and have their best shot at getting an SBA loan," Echols said. "We encourage people to come talk to us about their needs. We know what the banks are interested in, and their types of loans and products, and we can save people time by letting them know which banks offer the types of SBA services they need."

Through Aug. 10 of this fiscal year, First Hawaiian Bank led the way in the Hawaii District for highest loan amount at $8.4 million on 44 loans. Bank of Hawaii was second at $5.1 million on 51 loans. Central Pacific Bank gave out the most loans, 76, and ranked fifth in the value of the loans at $2.4 million.

"The bulk of those loans are for existing businesses that want to expand their business or purchase their headquarters as opposed to having to lease it and make monthly payments," Echols said.

The SBA is seeking to increase its smaller-dollar loans because many businesses need loans ranging only from $50,000 to $250,000, Echols said.

In the fiscal year that ended Sept. 30, 2011, SBA gave out 363 loans totaling a Hawaii District record of $75.8 million compared with 369 loans worth $52 million in fiscal 2010. Echols said the Hawaii District won’t set a record in fiscal year 2012 because fiscal 2011 was aided by incentive measures from October through December 2010 that included fee waivers and a 90 percent government loan guarantee in case of default.

"We continue to approve SBA-backed loans (in fiscal 2012) at a strong, growing pre-recession pace, in dollar terms," Echols said.

Nationwide, there were 60,000 SBA loans granted in fiscal 2011 totaling a record $30.5 billion.