In the early 1950s a concerned group of Hawaii businessmen saw a need. A growing number of minorities were seeking to buy homes and start new businesses.
However, the larger banks were not making small consumer loans at the time. To address this need, several businessmen, including Daniel Lau, Hiram Fong, Mun On Chun, Fong Choy, Clifford Yee and L.Q. Pang, formed Finance Factors Ltd. in 1952.
The company name comes from the traditional meaning of the word factoring — an extension of credit based on the value of a company’s receivables. Although the company never actually did any factoring, the name remains today.
"Finance Factors opened its first office on the corner of King and Smith streets in April of 1952, 60 years ago, with only nine employees," recalls co-founder Daniel Lau. "Bank of America gave us a $10 million line of credit to get started.
"The big banks wanted to make big loans. Finance Factors made many small loans, often so people could buy household items like furniture, washing machines and even pots and pans. We moved from there to auto loans. It was a good start.
"The banks were paying about 1.5 percent interest on savings deposits back then. We paid 4 percent, and we grew rapidly because of that."
Finance Factors had an unusual policy in its early days. "If union workers went out on strike, we suspended any loan payments they had with us until the strike was over," Lau says. "Sen. Fong was very popular because of that." Hiram Fong was in the Territorial Legislature for 14 years and served as its speaker for six. He was also a U.S. senator from 1959 to 1977.
"We are a family of companies," says Lau, 93. "We treat each other like family. Turnover of employees is very low. I’ve been with the company for 60 years. My greatest wish is that the company continues to grow in the future."
Today the company has a network of 13 branch offices and has become one of the largest financial institutions in the state. The company has nine branch offices on Oahu, two on Hawaii island, one on Maui, one on Kauai and a loan center in Guam.
The Finance Factors Family consists of three main operating companies: Finance Factors, Finance Insurance and Finance Realty.
What started as a company with $200,000 in cash and nine employees in 1952 has become one of Hawaii’s big players in the local lending market, with 116 employees.
Then-University of Hawaii graduate student Neil Abercrombie took out a loan from Finance Factors for his first election in 1970. It was so he could run against Finance Factors’ co-founder, Hiram Fong.
"Sen. Fong was up for re-election," now-Gov. Abercrombie recalls. "He was a Republican but popular with union people because Finance Factors waived loan payments if workers were out on strike.
"No one was running against him on the Democratic side. I decided to run because he supported the Vietnam War. I didn’t think I could beat him, but wanted to make a pro-peace point.
"I had no money to pay for advertising and decided to borrow $100 from Finance Factors because it was Fong’s bank. I had no money, so I went to the senator with the money. It was a way of attracting attention with a smile."
Abercrombie went into the King and Alakea branch and asked for a loan.
"What’s it for?" they asked.
To run against Sen. Fong, Abercrombie replied.
"They smiled. ‘Is this for real?’ they asked. ‘Yeah.’
"They went in the back, and when they returned they told me they wouldn’t make any money on such a small loan. It would have to be for more. ‘How much more?’ I asked. ‘$200,’ they replied. ‘Deal,’ I said.
"They were skeptical. ‘How can you run for the senate with only $200?’ they asked.
"My plan was to give away 4,000 nickels downtown on the corner of King and Bishop streets. It was symbolic because the Vietnam War caused inflation to hit 5 percent. For every dollar you earned in 1969, you now needed to earn $1.05 in 1970. That’s what the nickel represented, I told people when I gave them out. Elect me and I’ll do what I can.
"It was an interesting way to challenge the incumbent. I had no money. I had to think of something to get press coverage, and it worked. Passing out 4,000 nickels downtown got coverage in the papers, and people were talking about it in the days that followed."
At the last moment, Cec Heftel entered the race and beat Abercrombie in the Democratic primary.
"I got 15,000 votes, and when I ran for the state Legislature four years later, that name recognition helped me win the election," Abercrombie said. "Those nickels established in the public mind that I was fighting for the little guy.
"I’ve had a soft spot for Finance Factors since then. They could have said no, but they treated me in a businesslike fashion.
"To this day people come up to me and tell me I gave them one of those nickels. Finance Factors may have made it all possible. I congratulate them on 60 years of service to Hawaii."
———
Bob Sigall, author of the "Companies We Keep" books, looks through his collection of old photos to tell stories each Friday of Hawaii people, places and companies. Email him at Sigall@Yahoo.com.
