running efficient loan programs. kentucky assistive technology loan corporation (katlc) one...
TRANSCRIPT
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Running Efficient Loan Programs
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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!