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Assistive Technology Loan Fund Authority
Loan Manual

Policy Number ADMIN-1

Assistive Technology Loan Fund Authority (ATLFA) Loan Manual

Effective Date: April 25, 1997 Revised: March 15, 2001

The Assistive Technology Loan Fund Authority’s mission is to facilitate favorable credit financing of assistive technology for Virginians with disabilities.

The ATLFA provides low-interest loans with favorable terms and conditions through a participating financial institution; provides loan guarantees: and makes direct loans so that people with disabilities and their families may acquire assistive technology. The Board of Directors consists of twelve individuals appointed by the Governor. The Board meets monthly, or as needed, to conduct business and to make loan and loan guarantee decisions.

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 be consistent with the Code of Virginia and Bylaws of the organization. The Executive Director shall maintain and distribute the manual.

 

Policy Number ADMIN-2

Programs

Revised: March 15, 2001

The Assistive Technology Loan Fund Authority has developed 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. The Board of Directors may make other types of loans to better meet the needs of its customers.

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 rate set periodically by the Board.

Should the demand for loans exceed available resources, the Assistive Technology Loan Fund Authority Board may make loans available subject to certain priorities.

 

Policy Number ADMIN-3

Definitions

Revised: March 15, 2001

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

A creditworthy individual 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.

Ability to repay the loan is determined when an individual's debt to income ratio meets the standards set by the Board, assessing all income and other expenses.

Debt (or debt service) 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.

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.

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.

A participating bank is a financial institution that has agreed to make loans to qualifying borrowers 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 resident is a person domiciled within the Commonwealth of Virginia at the time of the application.

 

Policy Number GENERAL-1

Application Process

Revised: March 15, 2001

Applicants will receive application packets from the Executive Director or obtain them off the ATLFA Internet site. Application packets will include an ATLFA 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 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 Executive Director 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 Executive Director 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. Note that the Board of Directors for the Assistive Technology Loan Fund generally meets monthly.

If the Board approves the application, the Executive Director will refer the individual to a local branch for closing. Should the ATLFA reject the applicant for a guaranteed loan, the Executive Director 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.

The Executive Director 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.

 

Policy Number LOANS-1

Loan Criteria for Guaranteed Loans - General

Effective Date: April 25, 1997

The ATLFA operates its programs for individuals with disabilities and their family members as a special program in accordance with the Code of Virginia. The Authority does not discriminate because of race, color, sex, ethnic origin, religion or age. All borrowers must be legally able to enter into a binding contract with a lending institution.

The Assistive Technology Loan Fund Authority will only guarantee loans to Virginians with disabilities and their family members who meet the Board’s standards of being creditworthy and are able to repay the loan which they are applying for.

 

Policy Number LOANS-2

Income and Credit Criteria for ATLFA Loans -

Revised: March 15, 2001

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 his or her 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, 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 service to income 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 individuals who can prove their ability to repay, a 50% debt service 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.

The Board 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-signer. If the Board can not verify that an applicant's poor credit history is directly related to the individual’s disability, the Board 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.

 

Policy Number LOANS-3

Loan Criteria for Guaranteed Loans - Specific Guidelines

Revised: March 15, 2001

Guidelines for Acceptable Criteria for the ATLFA—

Residence: If the Borrower owns or rents his or her own residence and payments have been on time for at least the past year, stability is demonstrated.

Length of time at residence: The ATLFA prefers a minimum of a year’s stay, unless:

  • A recent move was necessitated by a promotion, or
  • The individual's relocation is related to their disability

Length of time at present job: While applicants do not have to be employed to qualify for an ATLFA loan, a minimum of one year’s continuous employment demonstrates stability and increases the likelihood of loan repayment. Exceptions to this guidance include if the:

  • Change is related to recent promotion
  • Change of employment is related to the disability

Credit history: Credit history priorities are as follows:

  • No adverse credit history.
  • Good credit within the past year. Previous credit problems have been worked out with the creditors. Additional documentation may be requested.
  • Poor credit history, including bankruptcy, will be considered if related to the individual’s disability. Certain slow pay situations will be considered.
  • Poor credit history is generally unacceptable if not related to the individual’s disability.

Beacon Score: The ATLFA uses an automatic credit scoring system and credit reports as part of its decision process on all applicants. The automatic scoring, or Beacon Score ranges from 400 to above 800. Financial institutions typically require scores approaching 700 for loan approval. The ATLFA considers a Beacon Score of 600 to be acceptable. The Board may approve applicants having ratings of 560 or above, if the credit problems were disability related and have been cleared up by the applicant.

Debt to Income Ratio

  • The ATLFA will generally approve an applicant with a 50% debt to income ratio if the borrower can adequately document sufficient cash flow for the loan.
  • Individuals with subsidized living arrangements may qualify for a guaranteed loan even if their debt to income ratio exceeds 50%. Qualifying borrowers must document that they have sufficient resources to pay for all living expenses and still have a reasonable expectation of repayment for a new loan may be considered by the ATLFA.
  • The Board may approve loans to individuals who have additional projected income because of an Assistive Technology Loan Fund Authority loan, which is verifiable.
  • Individuals having approval for special funding (such as a Plan to Achieve Self Support or PASS through SSA, or a MAP-122 Adjustment through DMAS) will be considered without regard to their debt to income ratio.

 

Policy Number LOANS-4

Interest Rate Subsidies

Revised: March 15, 2001

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

 

Policy Number LOANS-5

Loans for Tangible and Intangible

Revised: March 15, 2001

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 Assistive Technology Loan Fund Authority will require written verification of price and vendor before distribution of funds.

 

Policy Number LOANS-6

Home Modification Procedure

Effective Date: October 28, 2001

When a loan in excess of $5,000 is to be used for home modifications, the AssistiveTechnology Loan Fund Authority will require two bids from licensed contractors before distribution of funds. The contractors must be regularly doing business in the home construction field, must identify a fixed, firm price, and provide a turnkey service.

 

Policy Number LOANS-7

Joint Payment Check Procedure

Effective Date: September 23, 1997

When a guaranteed loan exceeds $5,000, the Assistive Technology Loan Fund Authority will require the financial institution to issue the check jointly to the borrower and the vendor.

 

Policy Number LOANS-8

Extension of Credit

Effective Date: January 22, 1998

When the Assistive Technology Loan Fund Authority approves a loan guarantee, the applicant must close the loan with the participating financial institution 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.

 

Policy Number LOANS-9

Loans for Re-Financing

Effective Date: March 15, 2001

The Authority does not make loans for the purpose of re-financing an existing loan. The Code of Virginia allows the Authority to make loans to individuals who will "acquire" assistive technology. Thus, an individual must be applying to the Authority for a loan in order to acquire assistive technology in order to be eligible for a guaranteed or direct loan.

 

Policy Number LOANS-10

Past Due Loans

Effective Date: March 15, 2001

The Executive Director will contact all borrowers having ATLFA guaranteed loans or direct loans where the borrower is 60 days past due. The Executive Director will determine the nature of the financial problem as well as the borrower's intentions. Guaranteed loans will be brought current, in accordance with the ATLFA-financial institution agreement. Failure to provide the ATLFA with a satisfactory explanation or a request for a term adjustment may result in the ATLFA purchasing the note, demanding payment or restructuring the note to assure repayment at the sole discretion of the Board.

 

Policy Number LOANS-11

Collections

Effective Date: March 15, 2001

The ATLFA Board has discretion to pursue loan collections when the customer has not made loan payments according to their agreement.

When an ATLFA Direct Loan borrower or guaranteed loan borrower is past due without an acceptable explanation and/or has not requested a modification of the term agreement due to acceptable reasons, the Executive Director will send out a series of collections letters. No response or an unsatisfactory response from the borrower will cause the Executive Director to begin reporting negative credit experience of the borrower with the ATLFA to appropriate credit bureaus.

Reasons that the ATLFA may view as acceptable include, but are not limited to:

Medical/physical change

Compounding disability

Change in employment status

Injury on the job

Family expenses that were unexpected

With an acceptable reason for non-payment, the Board will consider what it could do to help. Options may include the following:

Modify loan term and conditions

Financial counseling

Consumer counseling

The ATLFA will demonstrate a process of reasonable and timely interventions with the intent of keeping the loan active. Should the Board believe that repayment is not possible and the reasons are seen as acceptable, the Board may vote to discharge the debt.

Past due loans may be turned over for external collections.

 


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Phone: 703/524-6686  Fax: 703/524-6630  TTY: 703/524-6639
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