Running Efficient Loan Programs. Kentucky Assistive Technology Loan Corporation (KATLC) One...

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Running Efficient Loan Programs

Transcript of Running Efficient Loan Programs. Kentucky Assistive Technology Loan Corporation (KATLC) One...

Page 1: Running Efficient Loan Programs. Kentucky Assistive Technology Loan Corporation (KATLC) One Program’s Experience.

Running Efficient Loan Programs

Page 2: Running Efficient Loan Programs. Kentucky Assistive Technology Loan Corporation (KATLC) One Program’s Experience.

Kentucky Assistive Technology Loan Corporation(KATLC)

One Program’s Experience

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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)

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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

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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)

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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

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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

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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

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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

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Miscellaneous costs

• Board pays over $7,000 annually for liability insurance

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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

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Loan Servicing Costs

• Absorbed by Fifth Third Bank of Kentucky

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I am What I am

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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.

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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

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Budget in FY 2004

Income $73,475Expenses $99,782

Net Loss $26,307

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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.

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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?

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That’s All, Folks!