ATLFA LM - TOC

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REVISION

Purpose of ATLFA 100.1 1 11-02

Programs 100.2 1 02-04

Uses of ATLFA Funds 100.3 1 02-04

Fair Lending Guide 100.5 1 11-02

Credit Criteria Guide 100.6 1-2 11-02

Consumer

Non-Guaranteed Loans 200.1 1 11-02

Guaranteed Loans 200.2 1 11-02

Direct Loans 200.3 1 11-02

Consumer Service Fund Loans 200.4 1 02-04

Business

Non-Guaranteed Loans 201.1 1 11-02

Consumer

Application Process 300.1 1-2 11-02

Loan Committee 300.2 1 02-04

Non-Guaranteed Loans 300.3 1 11-02

Guaranteed & Direct Loans 300.4 1-2 11-02

Consumer Service Fund Loans 300.5 1 02-04

Treatment of Debt 300.6 1 11-02

Treatment of Income 300.7 1-2 02-04

Other Procedures 300.8 1 11-02

ATLFA LM - TOC

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02/19/04

REVISION

Business

Forms of Business 301.1 1 11-02

Application Process 301.2 1 11-02

Types of Financial Information 301.3 1 11-02

Non-Guaranteed Loans 301.4 1 11-02

Consumer Application and Closing Documents 400.1 1-2 11-02

Business Application and Closing Documents 400.2 1 11-02

Collection Policies 500.1 1-6 11-03

The Assistive Technology Loan Fund Authority (ATLFA) is a separate authority of the Commonwealth of Virginia and operates with financial support from the Commonwealth of Virginia, the US Department of Education through the National Institute on Disability and Rehabilitation Research, private foundation grants and individual donations.

The Loan Fund provides loans to individuals with disabilities within the Commonwealth of Virginia for the purpose of acquiring assistive technology, other equipment, or other authorized purposes designed to help such individuals become more independent and self-sufficient.

The Fund also provides loans to small businesses and non-profit organizations within the Commonwealth of Virginia for the purpose of acquiring assistive technology to employ/retain individuals with disabilities or to facilitate ADA modifications benefiting the disability community.

The Loan Fund shall be administered and managed by the Authority.

The Assistive Technology Loan Fund Authority’s mission is to facilitate favorable credit financing of assistive technology for Virginians with disabilities. Programs of the Authority include credit financing of assistive technology equipment and modifications for 1) Virginians with disabilities, 2) Virginia businesses to employ/retain individuals with disabilities or 3) Virginia businesses to make ADA modifications to increase accessibility for individuals with disabilities. A key feature of the ATLFA program, which works through a participating financial institution, is to provide loans with lower interest rates and more favorable terms and conditions. ATLFA also provides loan guarantees and makes direct consumer loans so that individuals with disabilities and their families may acquire Assistive Technology.

This manual provides guidance to the Assistive Technology Loan Fund Authority Board, ATLFA staff and any other individuals working on behalf of the ATLFA to make, facilitate or guarantee loans. The ATLFA Board of Directors shall approve all procedures included in, and added to this manual and ensure consistency with the Code of Virginia and Bylaws of the organization. The Authority shall maintain and distribute the manual.

The Assistive Technology Loan Fund Authority has developed loan programs to accommodate the needs of its customers, to meet its fiduciary responsibilities, and to follow the appropriate sections of the Code of Virginia. These programs include low interest loans made through a financial partner, guaranteed loans made through a financial partner, and direct loans made by the ATLFA. The Board of Directors may make other types of loans to better meet the needs of its customers.

The Board may delegate to a loan committee the authority to review and approve or deny loan applications. Any decisions made by the committee are based upon information provided to or obtained by the Board and are in accordance with criteria established by the Board and subject to the Board’s ratification at its next regular meeting.

Fees and charges may be assessed to applicants and borrowers of any of the Authority’s programs, in accordance with the Code of Virginia. These fees may be for application, guarantee, closing, administrative or insurance purposes, as determined to be necessary by the Board. Loans made directly by the ATLFA will have terms and interest rates set periodically by the Board.

The Code of Virginia requires that the Loan Fund "… shall be used to provide loans to individuals with disabilities within the Commonwealth for the purpose of acquiring assistive technology, or other equipment, or other authorized purposes designed to help such individuals become more independent. The Fund shall also be used to buy down interest rates of lending institutions making such loans and provide a loan guarantee for loans made by lending institutions for such purposes. The Fund shall be used only when, in the discretion of the Board, loan applicants have met eligibility criteria and the release of money is deemed appropriate."

The Code also indicates that "The Fund shall be administered and managed by the Authority. The costs and expenses of maintaining, servicing and administering the Fund may be paid out of amounts in the Fund."

While the Code of Virginia enables the ATLFA to establish programs for loans and other authorized purposes, use of available ATLFA funds are subject to any conditions upon which grants or contributions are made. Thus, an applicant for a loan must meet the criteria of being a "qualified borrower" and must be purchasing assistive technology or meet other authorized purposes of the Authority. Additionally, the applicant must meet any income and credit criteria established by the Authority, and the ATLFA must have available resources without restrictive conditions in order to obtain a loan from the ATLFA.

Assistive technology may include, but is not limited to:

• Computers with voice input/output, Braille output, or modified keyboards
• Telecommunication devices for the deaf or hard of hearing
• Hearing aids
• Low vision aids
• Home modifications for accessibility
• Motor vehicle modifications for accessibility
• Wheelchairs, scooters, or other mobility devices
• Durable medical equipment (orthotics, prosthetics, etc.)
• Vehicles with modifications (including vehicles completely modified at a factory) and manufactured housing (new double wide trailers modified for persons with disabilities at the factory) are considered to be assistive technology by the ATLFA

Should the demand for loans exceed available resources, the Assistive Technology Loan Fund Authority Board may make loans available subject to certain priorities. The Authority does not make loans for the purpose of re-financing an existing loan.

In conjunction with the participating bank, the Assistive Technology Loan Fund Authority’s Board of Directors may use the Fund to provide an interest rate subsidy for qualified applicants approved for guaranteed and non-guaranteed loans. ATLFA Direct loans will be set according to the interest rate, terms and conditions established by the Board.

Ability to Repay the Loan is determined when an individual's debt to income ratio (assessing all income and other expenses) meets the standards set by the Board or its financial partner or when a business’s cash flow and credit standards meet the criteria set by the Board or its financial partner.

Acronyms used mean the following: (ADA) Americans with Disabilities Act; (CSF) Consumer Service Fund, (LTV) Loan to Value; (MSRP) Manufacture’s Suggested Retail Price; (NADA) National Automotive Dealers Association; (UCC) Universal Commercial Code and (WSJ) Wall Street Journal.

Assistive Technology (AT) means any item, piece of equipment device, or modification that enables an individual with a disability to improve his or her independence and quality of life.

The Authority means the Assistive Technology Loan Fund Authority and is used as an abbreviation of ATLFA.

Board means the twelve individuals appointed by the Governor to be the Board of Directors of the Assistive Technology Loan Fund Authority. The Board meets quarterly, or as needed, to attend to the business of the Authority and to make loan decisions or to ratify the decisions of the Loan Committee.

A Business Principal Owner is defined as an owner with > 20% ownership in the business.

A Business Purpose Loan is defined as a loan application from a non-profit organization, corporation, partnership, or individual/sole proprietorship for business purposes that will be repaid from the cash flow of the business.

A Consumer Purpose Loan is defined as a personal loan application from an individual(s), where the loan is to be repaid from the income of the individual(s).

A Creditworthy Business is one who has demonstrated financial stability; good credit history and has sufficient cash flow to repay the loan.

A Creditworthy Consumer is one who either has a good credit history with no adverse credit problems and/or an individual who is actively addressing his or her credit problems. A creditworthy individual may also be one whose credit problems were related to excessive disability related expenses.

Debt (for consumer purpose loans) is defined as the monthly mortgage/rent payment, monthly payments for existing secured and unsecured loans including credit cards, alimony/child care obligations, and the monthly payment for the requested ATLFA loan.

Debt Service Coverage (for business purpose loans) is defined as business income divided by business debt including the new loan payment.

Discretionary Income is "Income" minus "Debt" and "Other Expenses" as defined in this section.

Global Debt Service Coverage (for business purpose loans) is defined as combined business and personal income divided by combined business and personal debt including the new loan payment.

Delinquent Account Any loan made directly by the Authority or loan made by a participating financial institution that is guaranteed by the Authority that has not been paid as agreed is considered a delinquent account.

Authority means the individual appointed to administer, manage and direct the affairs and activities of the Authority.

Income is defined as all wages, salary, commissions, interest, pensions, and other sources of financial support, paid or in kind including Supplemental Security Income (SSI), Social Security Disability Income (SSDI) and retirement benefits. Adjusted Gross Income (AGI) includes non-taxable income made equivalent to taxable income by increasing the non-taxable income by 25%.

An Individual with a Disability is a person who self identifies a limitation to a major life function, such as walking, talking, seeing, hearing, taking care of oneself, learning, becoming employed or maintaining employment.

Loan Committee means the group of individuals to which the Board has delegated the authority to review and approve or deny loan applications.

Loan Fund means the permanent and perpetual fund consisting of such monies as may be appropriated by the General Assembly, gifts, bequests, endowments or grants from the United States government, its agencies and instrumentalities, all receipts by the fund from loans made by it, all income form the investment of moneys help in the Fund, and any other available sources of funds, public and private.

Other Expenses are utilities, medical/disability expenses, clothing, groceries, transportation, child-care, taxes, insurance, entertainment/recreation expenses, and miscellaneous expenses.

A Participating Bank is a financial institution that has agreed to make loans to qualifying borrowers and businesses by signing an agreement with terms and conditions meeting Assistive Technology Loan Fund Authority program standards.

A Qualifying Borrower is defined as any resident of Virginia with a disability, or who has a family member with a disability. That person must demonstrate (i) that the loan will be used to acquire assistive technology or other equipment designed to help one or more persons with disabilities to improve their independence or become more productive members of the community, and (ii) the ability to repay the loan.

A Qualifying Business Borrower is defined as any small business or non–profit organization in Virginia that demonstrates (i) that the loan will be used to acquire assistive technology or other equipment designed to employ or retain one or more persons with disabilities or (ii) that the loan will be used to make structural modifications consistent with the Americans with Disabilities Act (ADA) to benefit persons with disabilities, and (iii) the ability to repay the loan.

A Resident is a person domiciled within the Commonwealth of Virginia at the time of the application.

SECTION 100.5 FAIR LENDING GUIDES

The ATLFA operates its programs to provide assistance with loans and in the purchase of Assistive technology, other equipment, or other authorized purposes designed to enable persons with disabilities to become more independent or more productive members of the community with an improved quality of life in accordance with the Code of Virginia.

The credit criteria will be applied equitably and fairly to all applicants without regard to the applicants’ race, gender, national origin, color, marital status, religion, age, disability or any factor other than sound lending and credit practices. All borrowers must be legally able to enter into a binding contract with a lending institution.

The ATLFA will only guarantee loans to Virginians with disabilities and their family members or to Businesses within the Commonwealth of Virginia who meet the Board’s standards of being creditworthy and demonstrate the ability to repay the loan.

The ATLFA does not disclose any nonpublic personal information about its’ customers or former customers to anyone, except as permitted by law. In addition, the ATLFA maintains physical, electronic, and procedural safeguards that comply with federal regulations to guard the nonpublic personal information.

SECTION 100.6 CREDIT CRITERIA GUIDE

Consumer

While the Authority has more flexible loan criteria than those of most lending institutions, it must have a reasonable expectation that the borrower will repay the loan. Generally, the Assistive Technology Loan Fund Authority is looking for a pattern of stability in its loan applicants in areas such as type of residence, length of time at residence and length of time at present job. It is also looking for a pattern of stability with respect to credit history. Where credit problems have arisen, it is essential that the applicant is doing something about those problems. This includes reducing current debt ratio, assuring cash flow is sufficient for living expenses and loans, and making written arrangements with borrowers.

The two most important criteria for an ATLFA loan are credit history and capacity to repay. A pattern of adverse credit that cannot be adequately explained and is not being dealt with will result in a declined application. Similarly, an individual who does not have adequate resources after paying all other obligations (as measured by a debt to income ratio or discretionary income) may not be approved for a loan or a loan guarantee.

Generally, the Authority will not provide loans for terms that exceed the amortized value or the general life expectancy of the equipment. While the Board may make exceptions for individuals who can prove their ability to repay, a 50% debt to income ratio (including the monthly payment for the new, ATLFA loan) is typically required for loan approvals. Applicants who do not meet that requirement may provide a qualified co-applicant. Persons who are unable to meet income requirements and cannot provide a qualified co-applicant may be considered for approval under the Consumer Service Fund (CSF) Loan Program.

The Authority will ask individuals having debt or credit issues to provide additional financial and/or other information in order to qualify for a loan guarantee. Individuals having unacceptable credit may provide a qualified co-applicant or be evaluated for a CSF Loan. If the Authority cannot verify that an applicant's poor credit history is directly related to the individual’s disability, the Authority will generally decline an ATLFA guaranteed loan application. The Authority will also generally deny individuals who do not have stability in their financial and personal lives.

SECTION 100.6 CREDIT CRITERIA GUIDE

Business

While the Authority has more flexible loan criteria than those of most lending institutions, it must have a reasonable expectation that the borrower will repay the loan. Generally, the Assistive Technology Loan Fund Authority is looking for a pattern of stability in its loan applicants in areas such as type of residence, length of time at residence and length of time at present job. It is also looking for a pattern of stability with respect to credit history.

The two most important criteria for an ATLFA loan are credit history of the business principal owner(s) and capacity to repay. A pattern of adverse credit that cannot be adequately explained and is not being dealt with will result in a declined application. Similarly, a business that does not have adequate resources after paying all other obligations (as measured by a debt service coverage ratio) may not be approved for a loan or a loan guarantee.

Generally, the Authority will not provide loans for terms that exceed the amortized value or the general life expectancy of the equipment. While the Board may make exceptions for businesses that can prove their ability to repay, debt coverage of 1.35x (including the monthly payment for the new, ATLFA loan) is typically required for loan approvals. Businesses that do not meet that requirement may provide a qualified guarantor. The Authority or its financial partner may ask the business owner(s) having debt or credit issues to provide additional financial and/or other information in order to qualify for a loan or loan guarantee.

SECTION 200.1 CONSUMER PRODUCT PROFILE

Non-Guaranteed Loans

Product Summary: Installment loans are offered to ATLFA loan applicants through the financial partnership arrangement. All loan applications are evaluated for a non-guaranteed loan using the Bank’s credit standards with modifications negotiated by ATLFA. The profiles of the products offered as non-guaranteed loans are as follows:

Type of Loan: Secured Unsecured Home Equity

Purpose: New Vehicles AT Equipment Home Modifications

Used Vehicles Other

Rate: Fixed rate; based on product type, credit quality and term of loan. Interest rate buy down of 4% will be applied to each loan.

Rate Floor: 3%

Term: New Vehicles 5,000 or less

Up to 78 months Up to 48 months Up to 20 years

Used Vehicles > $5,000

Up to 72 months Up to 60months

Loan to Value: New: 100% MSRP Up to 100% LTV Used: 115% NADA

Payments: Fixed; amortized using the term and rate of the loan.

SECTION 200.2 CONSUMER PRODUCT PROFILE

Guaranteed Loans

Product Summary: The Authority may provide loan guarantees, for applications declined by the financial partner, if the application meets the credit standards established by ATLFA. The profiles of the products offered are as follows:

Type of Loan: Secured Unsecured Home Equity

Purpose: New Vehicles AT Equipment Home Modifications

Used Vehicles Other

Maximum Loan: $30,000 $30,000 $30,000

Rate: Fixed, using Wall Street Journal Prime lending rate. Interest rate buy down of 4% will be applied to further reduce the rate.

Floor: 3%

Term: New Vehicles $5,000 or less

Up to 78 months Up to 48 months Up to 20 years

Used Vehicles > $5,000

Up to 72 months Up to 60 months

Loan to Value: New: 100% MSRP Up to 100% LTV* Used: 115% NADA

Up to 115% LTV*

Bureau Score: > 600

Home Improvement loan

Payments: Fixed; amortized using the term and rate of the loan.

* Value of real estate is based on current (within 1 year) assessment or appraisal. An appraiser approved by the ATLFA’s financial partner must perform the appraisal.

Product Summary: The Authority may offer installment loans directly to the individuals with out involvement of their financial partner depending on the requested loan.

Type of Loan: Secured and Unsecured

Purpose: AT Equipment

Minimum Loan: None

Maximum Loan: $4,000

Rate: Fixed, using Wall Street Journal Prime lending rate. Interest rate buy down of 4% will be applied to further reduce the rate.

Floor: 5%

Term: Up to 48 months

Payments: Fixed; amortized using the term and rate of the loan.

Collateral: UCC filing on AT equipment purchased

ATLFA LM 200.4

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Product Summary: The Authority may provide expanded alternative financing loans for applicants that do not meet the credit requirements of the other loan products offered by ATLFA. The profile of this product is as follows:

Type of Loan: Secured Unsecured Home Equity

Purpose: New Vehicles AT Equipment Home Modifications

Used Vehicles Other

Maximum Loan: $15,000 $15,000 $20,000

Rate: Zero (0%) interest

Floor: Not applicable

Maximum Term: 120 months 120 months 30 years

Loan to Value: New: 100% MSRP Up to 100% LTV* Used: 115% NADA

Payments: Fixed; amortized using the discretionary income and the term of the loan (not to exceed the maximum term.)

* Value of real estate is based on current (within 1 year) assessment or appraisal.

ATLFA LM 201.1

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11/21/02

Product Summary: Business loans are offered to ATLFA loan applicants through the financial partnership arrangement. All loan applications are evaluated for a non-guaranteed loan using the Bank’s credit standards with modifications negotiated by ATLFA. The profiles of the products offered as non-guaranteed loans are as follows:

Type of Loan: Secured and Unsecured

Purpose: ADA Modifications, Purchase of AT Equipment/Other Equipment

Minimum Loan: $10,000

Maximum Loan: $500,000

Loan Amount Fixed Rate Variable Rate

Term: Unsecured Auto Equipment

Up to 36 months Up to 72 months 4 to 6 years

Payments: Fixed; amortized using the term and rate of the loan.

Collateral: UCC filing

Title to vehicle

Blanket lien on assets

Specific lien on equipment

ATLFA LM 201.2

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Product Summary: The Authority may provide loan guarantees for business applications declined by the financial partner, if the business meets the credit standards established by ATLFA. The profiles of the products offered are as follows:

Purpose: ADA Modifications, Purchase of AT Equipment/Other Equipment

Minimum Loan: $10,000

Maximum Loan: $50,000

Rate: Fixed Rate Variable Rate

Internally Posted Rate Minus 2.0% Prime minus .50%

Floor: 4% No Floor

Term: Unsecured Auto Equipment

Up to 36 months Up to 72 months 4 to 6 years

Payments: Fixed; amortized using the term and rate of the loan.

Title to vehicle

Blanket lien on assets

Specific lien on

ATLFA LM 300.1

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Applicants will receive application packets from the Authority or obtain them off the ATLFA Internet site. Application packets will include an ATLFA consumer application form, the loan application of the bank, an instruction sheet and any other pertinent materials. Application packets will include all forms and instructions necessary to apply.

The ATLFA generally does not ask for proof of disability. However, the Board reserves the right to ask for attachments to provide evidence of a disability or for justification to the ATLFA for the device requested, which may include a letter from a physician or other appropriate licensed professional, evaluation reports, or vendor quotes should the applicant wish to make a purchase of something that is not generally considered to be assistive technology.

The Authority will contract with individuals having personal and professional experience in assistive technology or credit counseling. The Authority shall, at his discretion, hire Consumer Counselors who will assist applicants through the process of device selection, vendor selection, identification of other available resources, loan application, purchase of the assistive technology and financial training for both guaranteed and non-guaranteed loans.

Counselors will be selected based upon their skills and knowledge of assistive technology in the respective areas. This will allow them to provide a counseling function to the individual applicants and to provide related guidance and information.

The Authority may consider an application to be incomplete and require that

an applicant provide proof of additional income, proof of disability, or proof that the requested purchase of technology is, in fact, assistive in nature.

Upon receipt of a complete loan application packet, the Authority will forward the bank loan application to the participating bank. The bank will make its loan decision based on the terms and conditions as agreed to with the ATLFA. If approved, the bank will refer the applicant to a branch of their choosing in order to close the loan. The bank will notify the ATLFA of its decision.

Should the bank reject the application, it will send an adverse action letter to the applicant and notify the ATLFA. The Authority will notify the applicant informing him / her that it will consider the application for a guaranteed loan. The loan application will be evaluated for a guaranteed loan at the next Loan Committee or Board meeting.

If the Authority approves the application, the Authority will refer the individual to the ATLFA’s financial partner’s local branch for closing. Should the ATLFA reject the applicant for a guaranteed loan, the Authority will send an adverse action letter. The letter may offer an alternative to the applicant, such as approval for a lesser amount or approval with a qualified co-signer.

ATLFA LM 300.1

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Applicants will receive application packets from the Authority or obtain them off the ATLFA Internet site. Application packets will include an ATLFA consumer application form, the loan application, an instruction sheet and any other pertinent materials. Application packets will include all forms and instructions necessary to apply.

The ATLFA generally does not ask for proof of disability. However, the Board may ask for attachments to provide evidence of a disability or for justification to the ATLFA for the device requested such as evaluation reports, doctor’s orders, or vendor quotes should the applicant wish to make a purchase of something that is not generally considered to be assistive technology.

The Authority will contract with individuals having personal and professional experience in assistive technology or credit counseling. The Authority shall, at his discretion, hire Consumer Counselors who will assist applicants through the process of device selection, vendor selection, identification of other available resources, loan application, purchase of the assistive technology and financial training for both guaranteed and non-guaranteed loans.

Counselors will be selected based upon their skills and knowledge of assistive technology in the respective areas. This will allow them to provide a counseling function to the individual applicants and to provide related guidance and information.

Upon receipt of a complete loan application packet, the Authority will forward the loan application to the Loan Committee for evaluation. The Loan Committee will make its loan decision based on credit criteria established by the Authority and based upon information provided to or obtained by the Authority. If the application is approved, the Authority will prepare and mail the loan closing documents to the applicant. The Authority requires that loans closed by mail have all loan documents notarized. Should the Loan Committee reject the application, the Authority will send an adverse action letter to the applicant.

The Authority may consider an application to be incomplete and require that an applicant provide proof of additional income, proof of disability, or proof that the requested purchase of technology is, in fact, assistive in nature.

ATLFA LM 300.2

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All loan requests for less that $4,000 received by the Authority and any loan applications rejected by the Bank will be evaluated by the Authority for consideration of a Direct Loan or a Guaranteed Loan. The Authority has delegated to the loan committee its authority to approve or deny loan requests in accordance with credit criteria established by the Authority and based upon information provided to or obtained by the Authority. All approved loan decisions made by the Loan Committee will be considered final and will be ratified by the Board at its next regular meeting. The structure of the Consumer Loan Committee is as follows:

• The loan committee will meet in person monthly, at a minimum, to evaluate loan requests.

• The Loan Committee will consist of five (5) members with a quorum of any three (3) members in person required at each meeting. Committee representation exceeding the quorum of three may attend the meeting via teleconference.

• The Executive Director of the ATLFA will chair the Loan Committee and will be one of the three voting members.

• ATLFA Board members are required to complete a lending training program to be a member of the Committee and will serve on the Committee for a term of one year.

• The Authority will:
• Prepare the loan summary sheet for each pending application.
• The Executive Director will present the loan (using only the loan summary data credit sheet) to the committee at the meeting.

• Loan Committee members will evaluate the summary data; discuss the loan as needed and then vote on approval, denial or additional information needed.
• Approvals or denials made outside of ATLFA credit policy require compensating factors to be identified and documented.

• All appealed loans will be referred to the ATLFA Board for review and final decision.

• All loan data and corresponding summary sheets are given to the Authority for completion of the Board Ratification summary sheet prior to the next Board meeting.

ATLFA LM 300.3

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Type of Loan Secured Installment Unsecured Installment Home Equity

Purpose New Vehicles Equipment Home Improvement

Used Vehicles Home Improvement Other

Maximum Term New Vehicles $5,000 or less

Up to 72 months* Up to 48 months Standard

Used Vehicles Over $5,000

Up to 60 months Up to 60 months

Loan to Value Up to 100% LTV

Minimum Loan $4,000

Debt to Income Debt to income ratio limits will be increased on all products.

Underwriting Normal underwriting guidelines apply, other than as listed above.

Enhancements Fixed-rate, not to exceed WSJ prime as of date loan is closed.

• For 61-72 month terms, the minimum amount financed must be $25,000 or more.

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Loan applications for $4,000 or less will be evaluated by ATLFA for a direct loan. These loans will be booked and serviced by ATLFA in accordance with the established criteria and procedures.

Beacon Score: A Beacon Score of 600 or greater is acceptable. A Beacon Score of 560 to 600 is acceptable if the credit problems were disability related and the applicant(s) has since demonstrated the ability to meet his credit obligations.

• If the application is a joint request, the higher bureau score will be used.

Credit history: Credit history guidelines are as follows:

• A 50% debt to income ratio is generally acceptable if the borrower can adequately document sufficient cash flow or assets to repay the loan.
• The Board may approve loans to individuals who have additional and verifiable projected income because of an Assistive Technology Loan Fund Authority loan.

ATLFA LM 300.4

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• Individuals having approval for special funding (such as a Plan to Achieve Self Support (PASS) through SSA, or a MAP-122 Adjustment through DMAS) will be considered without regard to their debt to income ratio.

Financial Stability:

• Applicants should have sufficient and reliable income to meet their credit obligations (including the new loan payment).

ATLFA LM 300.5

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02/19/04

Beacon Scores and Credit History: Credit reports will be obtained on each loan to determine the current debt load of the applicant(s).

• Applicants with Beacon Scores that do not meet the requirements for the other ATLFA Alternative Financing Loan Programs will be considered acceptable.
• Derogatory payment history or public records on the credit bureau will not contribute to a loan turndown.
• Additional documentation may be requested to document recently paid loan balances in an attempt to determine repayment capacity.
• Loans will not be made to applicants that have previously defaulted on a loan to ATLFA.

Debt to Income Ratio:

• Debt to income ratios will not limit the approval of a loan if the applicant(s) have the sufficient discretionary income to meet the repayment requirements for the loan.
• The Board may approve loans to individuals who have additional and verifiable projected income because of an Assistive Technology Loan Fund Authority loan.
• Individuals having approval for special funding (such as a Plan to Achieve Self Support (PASS) through SSA, or a MAP-122 Adjustment through DMAS) will be considered without regard to their debt to income ratio.

Loan Repayment: Applicant(s) discretionary income, along with the maximum term limits, will be used to establish the length of term and monthly payment for the new loan.

• 25 % of discretionary income

• Floor: $10.00
• Ceiling: None

• Applicants should have sufficient and reliable income to meet their credit obligations (including the new loan payment).

ATLFA LM 300.6

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Each request for credit will be supported by a current credit bureau report to assist the Loan Committee and the Board in assessing both the willingness and ability to repay. When calculating the debt to income ratio, all current liabilities with regular monthly payments (as indicated by the credit bureau report and the credit application/financial statement) will be considered as follows:

On accounts with outstanding balances, payments will be calculated using 3% of the balance. (This calculation should be used even when a payment amount is shown in the "term" column due to the inconsistent information, which may be reported as "payments" by revolving creditors.)

If the applicant indicates a balance on the application/financial statement that is different from the balance reported on the credit bureau report, the payment will be calculated at 3% of the balance on the credit report.

On revolving accounts that are secured with home equity, payments will be calculated using 1.5% of the outstanding balance.

Do not include these types of accounts in the debt to income ratio regardless of the balance. These accounts are due and payable within 30 days and do not have a minimum monthly payment. Open accounts may also include a debt that is not required to be repaid at the present time, such as a student loan that is deferred.

The monthly payment is usually reported under the "term" column on the credit bureau report, and should verify back to the application/financial statement.

If the installment debt has 4 months or less remaining payments, the payment will not be included in the D/I ratio.

ATLFA LM 300.7

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An individual’s or business owner(s) income includes all wages, salary, commissions, interest, pensions and other sources of financial support, paid or in kind including Supplemental Security Income (SSI), Social Security Disability Income (SSDI) and retirement benefits. Adjusted Gross Income (AGI) includes non-taxable income made equivalent to taxable income by increasing the non-taxable income by 25%.

Hourly income provided by an applicant should be converted to a monthly rate based upon how many h ours the applicant actually works.

If an applicant provides a range for their income, the Board will seek further clarification for a more exact figure. If no exact figure can be obtained, an average of the range will be used for the income. Example:

The application states an annual base salary of $10,000 with $15,000 to $ 20,000 in commissions. The Board would average the commissions ($17,500) and add to the base salary for an annual salary of $27,500.

When an applicant reports the source of income to be from rental property, the income should be adjusted and any debt service on the property (if separate from the primary residence) should be netted out using the following method:

Gross monthly rent – Monthly mortgage payment = net amount

The net amount should either be added to debt or to income. Neither the gross rent nor the mortgage payment should be used in the d/I calculation.

Business income is established using the most recent two (2) years business financial statements and is defined as: net profit or loss + non cash expenses (interest and depreciation).

The income from self-employed individuals must be determined by evaluating tax returns and schedules. Generally self employed income can be calculated by taking the net income figure from the various schedules and adding back any non-cash expenses (i.e. depreciation) but other issues such as the likelihood the income will continue should be considered.

ATLFA LM 300.7

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The following types of income should be grossed up to adjust for the non-taxable status prior to calculating the debt to income ratio.

Social Security

Disability

Pensions/Retirements

Public Assistance (excluding Unemployment)

Tax-Free Interest Income

Child Support (Excluding Alimony)

If the income is one of the non-taxable categories above, calculate the grossed up amount using the following calculation, rounded to the nearest dollar:

Investment income should be determined by averaging the two most recent year’s income, if available. Interest and dividend income may be considered as ongoing income; however, capital gains should be treated as a one time income opportunity.

Discretionary Income is considered "Income" minus "Debt" and "Other Expenses" as defined in 100.4.

ATLFA LM 300.8

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11/21/02

Direct Loans and ATLFA Guaranteed Loans are governed by the following procedures:

Loans for Tangible and Intangible

The Authority will obtain the highest and most available collateral for all loans. This may include Uniform Commercial Code (UCC) filing for tangible and intangible. Home modification loans and loans for vans and automobiles will be collateralized through a deed of trust or the title, as appropriate. Applicants and advocates should note that the Authority intends to maintain the integrity of the loan process, recognizes its fiduciary responsibility to the Commonwealth, and expects repayment for all of its loans.

For any guaranteed loan for personal property, the ATLFA will require written verification of price and vendor before distribution of funds.

Guaranteed Loans in excess of $5,000 will require the financial institution to issue the check jointly to the borrower and the vendor. The Loan Committee may require the Authority to issue the check jointly on Direct Loans.

Guaranteed loans must be closed within ninety (90) calendar days of the date of approval. Applicants who have not closed their loan within the ninety-day period may be required to re-apply to the Authority for approval.

ATLFA LM 301.1

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11/21/02

A sole proprietorship is an individual operating as a business. Business assets and liabilities are accounted for as personal assets and liabilities. Thus, the sole proprietor is personally liable for all business debts.

A general partnership is a business operated by two or more general partners. Partnership assets, liabilities and ownership are accounted for separately and distinctly from the personal assets and liabilities of individuals. Individuals are responsible for the debts of the partnership; thus the personal assets of partners are exposed to liability.

A limited partnership consists of one or more general partners and one or more limited partners. The purpose of a limited partnership is to allow one or more individuals to provide capital without having to assume liability for the partnership debts. Limited partners are only liable for debts of the partnership if they guarantee the debts. They can only lose the amount of their investment in the partnership. General partners control the activities of the business and have full liability.

A corporation is an entity created by law. Shareholders own the company, elect directors and vote on major corporate decisions. A board of directors manages the corporation and elects officers to operate the company on a daily basis.

A corporation exists independently from the people who own it its shareholders are liable only to the extent of their investment in the corporation. The corporation is responsible for its own debts, thus shielding its owners from corporate debts and other obligations as long as the business is conducted in "good faith." Taxation issues differ between S Corps and C Corps.

The Limited Liability Company (LLC) originated in 1977 in Wyoming, but wan not recognized by the IRS until 1988. It can have an unlimited number of shareholders (usually called members) and classes of stock. The owners’ liability is limited to their investment in the company. The LLC is treated like a partnership for tax purposes as long as it does not have more that two of the four major corporate characteristics (continuous life, tradable interests, limited liability or centralized management). Thus, income is taxed and losses are passed through to the owners.

ATLFA LM 301.2

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11/21/02

Upon receipt of a complete loan application packet, the Authority will forward the bank loan application to the participating bank. The bank will make its loan decision based on the terms and conditions as agreed to with the ATLFA. If approved, the bank will refer the applicant to a branch of their choosing in order to close the loan. The bank will notify the ATLFA of its decision.

Should the Bank reject the application, the Bank will send an adverse action letter to the applicant and notify the ATLFA. The Authority may choose to review the loans that were not approved by the Bank for a guaranteed loan. If the Authority makes that decision, the Authority will notify the business owner(s) informing him / her that it will consider the application for a guaranteed loan. The loan application will be evaluated for a guaranteed loan at the next Loan Committee or Board meeting.

If the Authority approves the application, the Authority will refer the business to their chosen local financial partner’s branch or its financial partner’s business banker for closing. Should the ATLFA reject the applicant for a guaranteed loan, the Authority will send an adverse action letter. The letter may offer an alternative to the business, such as approval for a lesser amount.

The Authority may consider an application to be incomplete and require additional financial information as specified on the financial partner ‘s checklist.

ATLFA LM 301.3

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11/21/02

• Balance Sheet – lists assets, liabilities and net worth of business
• Income Statement (a.k.a. Profit and Loss) P&L) Statement) – lists sales/revenues, costs/expenses and net profit
• Footnotes – required on audited or reviewed statements; may be seen with compiled statements

• CPA’s – audited, reviewed or compiled statements
• Tax accountants – also prepare the business’ annual tax returns
• Company itself – company prepared

NOTE: Compiled or company prepared statements must bear the signature ( with date) and title of the officer who attests to the accuracy and completeness of the statements.

• Form 1040 – Individual Tax Return
• Form 1120 – U.S. Corporation Tax Return (C Corporation only)
• Form 1120S – U.S. Income Tax Return for S Corporation
• Form 1065 – U.S. Partnership Return of Income
• Schedule K-1 (1065) – Partnership form to be filed with form 1040
• Schedule K-1 (1120S) – S Corporation form to be filed with form 1040
• Schedule C – Sole Proprietorship schedule to be filed with form 1040

S Corporations and Partnership do not pay taxes directly but must funnel income, credits, or deductions to be taxed to the individual stockholders or partners. Tax documents showing these items are called K-1s; 1120S for S Corporations and 1065 for Partnerships. Schedule C for Sole Proprietorships is filed with 1040 Individual Tax Return.

ATLFA LM 301.4

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11/21/02

Purpose Modified Vehicles Modified Vehicles

AT Equipment AT Equipment

ADA Modifications ADA Modifications

Maximum Term Auto Up to 36 months

Up to 72 months

Equipment

Up to 72 months

Credit Underwriting Normal underwriting guidelines apply, other than as listed above

Gross Sales: Less than $5MM

Years in Business Minimum of 3 years

Personal Guarantees Principals/owners with > 20% ownership. At least 50% of the ownership interest must guarantee the loan.

Credit History Principals/guarantors must have satisfactory credit history and be free of previous personal bankruptcy, judgments, liens, charge-offs or a history of delinquency greater than 30 days.

Debt Service Debt service coverage based upon two-year financial information. Global debt service must be no less than 1.35 times, including the proposed debt.

Pricing Enhancements Variable rate; set at Prime as of date loan is closed.

Fixed rate; .75 – 1.5% lower than internally posted rate.

ATLFA LM 400.1

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11/21/02

The following documents are used for Consumer Loans offered with this program. The ATLFA Authority has copy of each document on file in the ATLFA office.

ATLFA Personal Credit Application

ATLFA Information Sheet

Financial Partner’s Loan Application

Personal Financial Statement

Credit Report

Promissory Note and Disclosure

SunTrust Privacy Policy

Disbursement Request and Authorization

Disclosure Statement

Promissory Note

SunTrust Privacy Policy

Disbursement Request and Authorization

Consumer Security Agreement

Power of Attorney

Agreement to Provide Insurance

Notice of Insurance Requirements

Disclosure Statement

Promissory Note

SunTrust Privacy Policy

Disbursement Request and Authorization

Deed of Trust

Settlement Statement

Agreement to Provide Insurance

Notice of Insurance Requirements

Authorization for Payoff

Notice of Right to Cancel

ATLFA LM 400.1

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11/21/02

Loan Data Summary

Loan Amortization Schedule

Disclosure Statement

Promissory Note

Security Agreement

Loan Committee Credit Summary

Statement of Credit Denial

ATLFA LM 400.2

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11/21/02

The following documents are used for Business Loans offered with this program. The ATLFA Authority has copy of each document on file in the ATLFA office.

ATLFA Application

Financial Partner’s Business Banking Application

Application Checklist

Corporate Borrowing Resolution

Business Financial Statement

Principal Owner(s) Personal Financial Statement

Principal Owner(s) Personal Tax Returns

Unconditional Commercial Guaranty

Commercial Note

Financial Partner’s Privacy Policy

Security Agreement

UCC Financing Statement

ATLFA LM 500.1

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11/17/03

Extensions are normally granted for unusual circumstances, such as illness/medical, change of residence, or loss of work. Customers taking advantage of an extension should be able to maintain their payments after the extension period. Extensions are discouraged for customers who are generally overextended and unable to make payments, or who will be past due again when the extension period is over. In all cases, evaluation of the customer’s ability to pay and payment history should be considered.

• No extensions during the first 3 months of the loan.
• No more than 1 extension for each 6 months the loan has been on the books.
• A loan should not be extended more than 4 months during a 6 month period.

• Any extension greater than 4 months.
• More than 6 extensions on a 60 month contract; more that 10 extensions on a 120 month contract.
• Any exception to Normal Extension Parameters

All extensions approved by the Executive Director will be reported to the Board at the next regularly scheduled Board meeting.

ATLFA LM 500.1

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11/17/03

Rescue payments are normally granted for unusual circumstances, such as illness/medical, change of residence, or loss of work. Customers receiving rescue payments from ATLFA should be able to maintain their payments with the Authority’s financial partner after the ATLFA payment is made. Rescue payments should not be offered for customers who are generally overextended and unable to make payments, or who will be past due again the following month. In all cases, evaluation of the customer’s ability to pay and payment history should be considered.

• A loan should be > 60 days delinquent but not greater than 90 days delinquent
• No more than 2 rescue payments during a 6 month period.
• No more than 2 rescue payments may be made during the life of the loan.
• Exceptions to these parameters may be made by the Executive Director, but are required to be reported to the Board at the next regularly scheduled Board meeting.

• More that 4 delinquent payments in a 6 month period.
• Two rescue payments within a 6 month period have been made by ATLFA.
• Exceptions to these parameters may be made by the Executive Director, but are required to be reported to the Board at the next regularly scheduled Board meeting.

ATLFA LM 500.1

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11/17/03

• All past due accounts exceeding 180 (+) days delinquent will be charged off within thirty (30) days of the account exceeding 180 days past due.

1. The customer is making payments in accordance with an agreement reached with the collections agency or ATLFA Executive Director.
2. The customer has accident and health (A&H) claims pending or A&H payments forthcoming.
3. The collateral securing the loan has been repossessed and liquidation is scheduled within ninety (90) days of the account becoming 180 days delinquent.
4. The first 180 days an account is in dispute.
5. The Executive Director approves an exception to these parameters. All exceptions approved by the Executive Director are required to be reported to the Board at the next regularly scheduled Board meeting.

• Bankrupt accounts will be charged-off within ninety (90) days of receipt of the Bankruptcy Notice.

1. The customer continues to pay and maintains the account in good standing. (Chapter 7)
2. The account has pending reaffirmation or has reaffirmed the debt and the customer is continuing to pay with regular payments.
3. The account is being paid outside the plan. (Chapter 13).
4. The Executive Director approves an exception to these parameters. All exceptions approved by the Executive Director are required to be reported to the Board at the next regularly scheduled Board meeting.

ATLFA LM 500.1

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11/17/03

• Deceased accounts will be charged off within ninety (90) days of the receipt of death certificate.

1. The executor or administrator or individual legally responsible for estate has indicated life insurance benefits will be forthcoming prior to account reaching 180 days past due.
2. The payment arrangements have been made by maker, co maker, or endorser.
3. Payment arrangements are made with executor/ administrator, individual legally responsible for estate or an individual/guarantor accepting responsibility for the obligation to bring account current within 120 days.
4. The Executive Director approves an exception to these parameters. All exceptions approved by the Executive Director are required to be reported to the Board at the next regularly scheduled Board meeting.

Rescheduled Loans:

• No loans may be rescheduled for more than 12 additional months.
• The APR should remain the same as the original loan.
• Terms of the rescheduled loan must be re-disclosed to the customer.
• The maturity date and monthly payment must be changed on the billing system.
• The loan may be rescheduled 1 time during the life of the loan.

Any rescheduled loan outside of the above parameters must be approved by the Executive Director and reported to the Board at the next regularly scheduled Board meeting.

The Executive Director may determine that a loan may be forgiven for the following reasons:

• Medical/physical change
• Compounding disability
• Change in employment status
• Unexpected Family expenses

All loans approved for Debt Forgiveness must be reported to the Board at the next regularly scheduled Board meeting.

ATLFA LM 500.1

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11/17/03

ATLFA will begin the process to obtain judgments on accounts that reach 120 days past due unless the reason for non- payment is one of the accepted reasons as approved by the Board:

• Medical/physical change
• Compounding disability
• Change in employment status
• Unexpected Family expenses

ATLFA will not use the judgment to garnish wages, bank accounts or levy non-exempt personal property. The judgment will be obtained for inclusion in the customer’s credit report since ATLFA does not have the minimum number of accounts to report credit history with the credit reporting agencies.

ATLFA will evaluate delinquent auto loans for potential Repossession once the account exceeds 120 days past due, or earlier, if voluntary or payment viability deemed unlikely and the potential realized value of the sale exceeds the cost of repossession.

• Prior to repossession activity, ATLFA will review the account to:

• ensure there has been diligent collection activity in accordance with the Collection procedure manual,
• evaluate the potential value of the repossession and liquidation sale compared to the expense incurred to ATLFA,
• determine if the reasons for non-payment warrant an exception for loan modifications or debt forgiveness,
• determine if the repossession process should proceed, and
• ensure a courtesy notification is communicated to the Secretary’s Office in advance of each repossession, if applicable.