1. Running Efficient Loan Programs

2. Kentucky Assistive Technology Loan Corporation(KATLC) One Program’s Experience

4. KATLC Loan Guarantee Model • Loan servicing costs absorbed by lending partner (Fifth Third Bank of Kentucky) • Limits program income (currently receive 2.0% on money deposited with lending partner)

5. KATLC • Unique for a ‘community-based organization’ • Created by state statute as a ‘independent de jure municipal corporation and political subdivision of the Commonwealth of Kentucky’ • Resides in state government but controlled by a consumer-dominated Board of Directors • Some costs have been absorbed by state agency • Currently receives $100,000 annual allotment in state funds which are used for operating costs

6. Cost of Operating a Loan Program • Staffing costs • Ongoing operational costs (rent, utilities, telephone, travel, etc.) • Marketing costs (printing, advertising, mailing, etc.) • Board support costs (meeting costs) • Miscellaneous costs (liability insurance) • Loan-related costs (fees, buy-downs, defaults) • Loan servicing costs (absorbed by lending partner)

8. Staffing Costs • Currently have two full-time staff costing about $75,000 per year including fringe benefits and contractual overhead • OVR donates financial management, some marketing staff time, and some other miscellaneous services • Staff duties include processing applications, communicating with lending partner, marketing program, developing referral sources, following along with borrowers, data management, supporting Board of Directors

9. Staffing Costs • Board is struggling with how much staff time is needed to process current level of applications • Exploring sharing staff with another agency program or having other staff absorb KATLC duties

10. Ongoing Operational Costs • Rent, utilities, most office supplies, and telephone to date have been absorbed by OVR (always subject to change) • Travel paid from state allotment

11. Board support costs • Principally related to meeting expenses • KATLC Board of Directors meets four time per year and usually at a state park to keep costs down • KATLC Board uses an e-group to review applications in order to reduce the need for meetings • Unexpected cost: had to purchase a computer for a Board member to facilitate their participation in e-group

12. Miscellaneous costs • Board pays over $7,000 annually for liability insurance

13. Loan-related Costs • Loan fees are charged to program, not to applicants - but lending partner has always waived charges at end of year • Interest buy-downs - this year buying all loans down from 6% to 4.5% • Defaults

14. Loan Servicing Costs • Absorbed by Fifth Third Bank of Kentucky

15. I am What I am

16. Income in FY 2004 Income • State Allotment* $41,429 • Interest Income $32,046 • Total Income $73,475 * Budget crisis forced the state to take back $58,571 of the $100,000.

17. Expenditures in FY 2004 Expenditures • Staffing costs $72,374 • Ongoing operational costs $3,414 • Marketing costs $2,213 • Board support costs $6,700 • Miscellaneous costs $7,410 • Loan-related costs $7,671

18. Budget in FY 2004 Income $73,475 Expenses $99,782 Net Loss $26,307

19. Current Loan Portfolio • As of September 30, 2004, KATLC had 123 outstanding loans worth $726,267.83. Seventy percent of that amount was guaranteed by KATLC with the balance of the risk assumed by the lending partner. • As of September 30, 2004, KATLC had $1,767,053 on deposit with Fifth Third Bank of Kentucky available for guarantees.

20. Issues in the Future • What are our true staffing needs? • What do we do if we lose our state allotment? • What do we do if we have to pay rent and utilities?

22. That’s All, Folks!