Exhibit A - Loan Guaranty Program Projections

Guaranty Fund Capacity
Year 1 Beginning Balance = $1,000,000
Year 1   Year 2   Year 3   Year 4   Year 5
Beginning 1,000,000 979,250 948,363 912,305 872,098
Administrative Costs -50000 -50000 -50000 -50000       (50,000)
Claims Paid Out 0 -9,515 -13,759 -16,826 -19,063
Interest Earnings 29,250 28,628 27,701 26,619 25,413
Balance-Investable funds 979,250 948,363 912,305 872,098 828,448
Guaranty Capacity at 1:1 at 1:1 at 2:1 at 2:1 at 3:1
979,250 948,363 1,824,610 1,744,196 2,485,344
Outstanding Loans 222,431 475,726 687,953 841,305 953,137
at 12/31/year
Excess Capacity 756,819 472,637 1,136,657 902,890 1,532,207
                         
Total # loans 50 70 80 90 100 390
Total $ loans 250,000 350,000 400,000 450,000 500,000 1,950,000

PROJECTIONS ASSUMPTIONS

Summary Table
  1. Beginning. Shows the beginning of year guaranty fund balance. Year 1=NIDRR grant + Match
  2. Annual program administrative costs.
  3. Claims Paid. Assumes no claims paid Year 1, since only 6 months loan amortization. Thereafter, calculated at 2% of outstanding loans at year end. Somewhat overstates claims because collateral recoveries are not considered.
  4. Interest Earnings. Investment or interest earnings calculated at 3% on the average guaranty fund balance over a year.
  5. Balance. Beginning guaranty fund balance minus administrative costs and claims plus interest earnings.
  6. Guaranty Capacity. During years 1 and 2, guaranty fund makes $1 of guaranty commitments per $1 of bank loan originations--effectively providing for a 100% loss rate. Years 3 & 4 leverage increases to 2 to 1 and then 3 to 1 in year 5, providing for a 50% and 33% loss rate, respectively. Loss rate assumptions are reduced over the period as the program establishes a track record-- national experience for similar programs is less than 2%. Loans are guaranteed 100% to the the extent funds are available in the guaranty fund which provides for 100-50-33% loss rates over the five year period.
  7. Outstanding guaranteed loans ( principal) at year end based on origination schedule and amortization.
  8. Excess Capacity. Difference between outstanding loans and guaranty capacity.
  9. The last two rows summarize the number of loans originated each year and the total over 5 years.

Other Assumptions

  1. $ 750,000 NIDRR grant and $250,000 matching grant.
  2. Interest rate on loans charged at 7%. These rates
  3. The average size loan is $5000.
  4. The average loan term is 48 months.
  5. Program provides a guaranty of principal only.
  6. Loan originations. See summary table which would be supported by amortization worksheets, not attached. Projections place all guaranteed loan originations on July 1 of each calendar year. This simulates originations occurring evenly through the 12 months of the year.

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