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TAP Bulletin - Nov/Dec 1994
FINANCIAL LOAN PROGRAMS
The Technology-Related Assistance for Individuals with Disabilities Act Amendments of 1994 (Public Law 103-218) supports state efforts to implement consumer-responsive, comprehensive, statewide programs of technology-related assistance for individuals with disabilities of all ages. One of the eleven purposes of the Tech Act is to increase funding for, and access to, assistive technology devices and services.
Title I of the Tech Act, grants to states, outlines priority activities to accomplish the purposes of the Act. One of the state Tech Act project initiatives to overcome the lack of resources to pay for assistive technology or provide needed devices in a timely manner, is the establishment of alternative state or private, model financial systems of subsidies for the provision of assistive technology devices and services such as:
for the purchase, lease or other acquisition of assistive technology devices and services.
Title III of the Tech Act authorizes additional grants to states to pay the federal share of the cost to establish or expand and administer, alternative financing mechanisms. However, no funds were appropriated to implement this section of the Act for this fiscal year.
Traditional loans are made directly from a lending institution (credit bank, bank, public agency or private not-for-profit) to applicants, with the lending institution own funds. Revolving loan funds provide loans to individuals, and loan repayments are dedicated to the re-capitalization of the loan fund, to be recycled into future loans. Guaranteed loans are backed by a promise or "guarantee" that even if the loan goes into default, the loan will be paid back by a federal or state agency or private industry.
Alternative funding sources, such as low-interest, no-interest or revolving loan funds have been developed by state Tech Act projects as a direct means to increase consumer access to assistive technology devices and equipment.
How do these financial loan programs differ from conventional loans? Flexibility and consumer responsiveness are integral parts of state Tech Act project financial loan programs. Eligibility criteria are unique and credit history requirements are relaxed. Technical assistance is available based upon individual need and may include physical assistance to complete application forms or to read instructions. Other ways that these alternative financial loan programs differ from conventional loans include extended and variable terms of repayment, utilization of co-signers and establishment of loan appeal procedures. Active consumer involvement is evident in both the loan appeal process and administrative oversight areas.
Tech Act project pioneers who have succeeded in establishing financial loan funds attribute some of their success to early collaboration with other community organizations to help create and operate the loan funds. The Illinois Assistive Technology Project operates a loan program in conjunction with both the state treasurer's office and local banking institutions. The Nevada Assistive Technology Collaborative has a loan fund which is administered by the Assistive Technology Center at the Nevada Community Enrichment Program; other loan programs operate in conjunction with consumer advocacy organizations.
Many state Tech Act projects reported extensive research on alternative and revolving fund models prior to establishing a fund. Feasibility studies were conducted and numerous groups were contacted and interviewed during this process. Most cite technical assistance provided by Alpha One, an independent living center in Maine, through their Credit-Able project, a federally funded technical assistance project under Title II of the Tech Act. This project was completed in 1992.
Eleven state Tech Act projects currently operate financial loan programs. Types of assistive technology funded under the loan programs include electric wheelchairs to computers, page-turning devices, illuminated magnifying devices, computer-driven environmental control systems, electric scooters and home modifications. However, restrictions of certain types of equipment may apply to certain states.
Outreach to consumers is provided through a variety of public relations activities, newspaper
and radio press coverage, public service announcements, conference presentations and
exhibits. Wide distribution of brochures and information packets are also utilized to inform
and educate consumers about state loan programs.
National Research of Loan Financing Practices, produced by Virginia Assistive Technology System, December 1993.
Financial Loan Programs to Pay for Assistive Technology Devices and Equipment, produced by the RESNA Technical Assistance Project, May 1994.
STATE LOAN PROGRAM INFORMATION
The Connecticut Assistive Technology Loan Fund was established in January 1994. Initial funding for this public-private partnership program was provided through Tech Act project dollars and state bond monies via legislative action. In addition, People's Bank, the fiduciary agent for the loan fund, has made private dollars available for reduced interest loans to individuals with disabilities who exceed the median income level of $28,329 for an individual or $54,479 for a family of four and meet conventional loan standards. There are plans to perpetuate the fund through additional state dollars, reinvestment and increased commitment from the bank.
There are no set limits on loans. The amount of the loan depends upon the cost of the equipment and the person's ability to repay. Loans may be repaid over the anticipated useful life of the equipment, up to a maximum of five years. Loans are offered between 2 percent and the prime rate. Individuals with incomes above the median income level are offered bank loans at the prime rate plus one half percent.
Peer counselors located at the Independent Living Centers provide a single point of entry. Technical assistance is provided by counselors to assist applicants with the loan process and explore alternative or cooperative sources of funding, especially public sources, prior to a request for financial loans. Peer counselors will also work with clients on consumer credit issues and give help to loan recipients who experience difficulty making scheduled payments.
The Nevada Assistive Technology Loan Program was established in December 1991. A cooperative agreement was signed by the Division of Rehabilitation, the Assistive Technology Center at Nevada Community Enrichment Program, the Nevada Assistive Technology Loan Committee, and Bank of America. Initial funds were provided through a grant from the Division of Rehabilitation and placed in an interest-earning account with the Bank of America. This money is used to guarantee the loans made by Bank of America. The original guidelines which govern the program were revised (September 1994) to incorporate consumer feedback and to make the program more accessible.
Loans are available in amounts up to $5,000. Payment terms range from 12 to 36 months. Terms may be lengthened to 48 or 60 months if lowering the payment will help the consumer meet the financial qualifications. Loans are made at the prime interest rate. Consumers qualify based upon minimal credit criterion and examination of financial obligations. To date, 48 loans have been issued with two defaults.
The Nevada loan program is administered by the Assistive Technology Center (ATC) who serves as a liaison between the Bank of America and the consumer. ATC's role is to work with the potential loan applicant and assist him/her in applying for the loan. ATC also works with the consumer to ensure that he/she has exhausted all other funding sources, including cooperative funding mechanisms. The applicant is assisted with completion of the application and advocacy with the bank. Consumers can be assisted over the phone, at their homes or at the ATC offices. ATC also provides follow-up with the individual to maximize success with the loan program and satisfaction with the assistive technology.
The Vermont Adaptive Equipment Revolving Loan Fund was established in September 1990. Tech Act project dollars were used for initial funding to support low-interest loans and to capitalize the fund. The state legislature authorized the loan program but failed to appropriate any money. An Advisory Loan Board was created by state statute to advise the Agency of Human Services on individual loan applications and policies related to the loan fund.
Limits on loans are a minimum of $2,500 with no set maximum. The loan board makes decisions based upon available funds, potential to repay, need and risk. The highest loan awarded to date has been $40,000. The interest rate is calculated on the prime rate established by the Boston area banks, currently hovering around 6 to 6.5 percent. The board will not issue loans above 8.5 percent. Fluctuations in the prime rate will be reflected by the loan fund. Terms of payment reflect individual need, ability to repay, the expected life of the equipment, and total volume of loan requests. The average loan is $3,624 over 36 months. Loans are guaranteed through maintenance of a loan/loss reserve for defaulted loans; no Tech Act funds are used to secure the loan, as the fund guarantees itself.
Technical assistance is available to consumers through the Vermont Assistive Technology Project's five Regional Advocates. Consumer credit organizations are sometimes used to help educate consumers. Alternative and cooperative sources of funding are explored with the applicant prior to using the loan program.
The New Hampshire Guaranteed Collateral Loan Fund was established with first year carryover dollars from New Hampshire's Tech Act grant and became operational in July 1994. The program makes loans available through the Bank of New Hampshire with Tech Act project funding used to guarantee the loans. The Guaranteed Collateral Loan Fund is a final resort funding source.
Limits on loans are a minimum of $1,000 and maximum of $5,000. Loans are low-interest and set at the prevailing passbook rate, approximately 2.5 percent. Technical assistance is provided by project staff who coordinate and assist applicants by phone, mail or in person. Alternative means of funding are explored with the consumer. Outreach to consumers is offered through brochures and project training events.
The Utah Assistive Technology Project established the Utah Assistive Technology Foundation Board in 1991 to institute a low-interest guaranteed loan program. Loans are offered up to a maximum of $10,000, although the Foundation Board may approve loans that exceed this amount. Interest rates are determined by the term of loan repayment, rather than dollar amount of loan. Interest on loans up to 60 months is one percent above prime rate; interest on loans over 60 months is two percent above prime rate at the time the loan is approved. Once a loan is made, the interest rate becomes fixed and is not affected by future changes in the prime rate. Individuals making automatic loan payments debited from a First Security Bank of Utah checking account receive a one half percent loan rate reduction. Loans are made through the First Security Bank of Utah, N.A., which has provided $500,000 for this loan program. The foundation acts as a guarantor of some of the loans as agreed upon between the foundation and the bank. The foundation has raised more than $125,000 to guarantee the loans. Utah's Tech Act project provided $40,000 to the foundation. Applications are submitted to and approved through the Foundation Board. Applicants do not contact the bank directly. Loans made have ranged from $350 to more than $21,000.
The North Carolina Adaptive Loan Program was established in 1992 when awarded a grant under Title II of the Tech Act, and began operation by the end of 1993. A written agreement was signed between Programs for Accessible Living and Nations Bank with the initial phase of the loan program beginning with $157,000; a total fund of $220,000 is available.
Limits established for loans are a minimum of $500 and maximum of $15,000. Terms of payment depend upon the amount of money borrowed, but the average term is two years. Currently, the loan rate is 7 percent. To date, 25 loans have been made, totalling $113,000.
The program is administered by Programs for Accessible Living, a not-for-profit, non-residential Center for Independent Living (CIL) that is operated for and by individuals with disabilities. Assistance is available to applicants throughout the loan process.
Idaho Assistive Technology Loan Program was established in September 1994 under an agreement with the Idaho Community Foundation and First Security Bank. Tech Act dollars are used to guarantee loans. A total of $56,000 has been loaned to date.
States Currently Considering a Loan Program include:
States with Equipment Loan Funds Prior to the Tech Act:
For more information regarding the loan programs, contact the state program directly:
Dr. Daryl J. McCarty
The RESNA Technical Assistance Project (#HN92031001) is funded by the National Institute on Disability and Rehabilitation Research (NIDRR), U.S. Department of Education (ED) under the Technology-Related Assistance for Individuals With Disabilities Act Amendments of 1994. The information contained herein does not necessarily reflect the position or policy of NIDRR/ED or RESNA and no offical endorsement of the material should be inferred.
The National Assistive Technology Technical Assistance Partnership is a cooperative agreement between the U.S. Department of Education and RESNA. The grant (Grant #H224B050003; CFDA 84.224B) is funded under the Assistive Technology Act of 1998, as amended and administered by the Rehabilitation Services Administration, Office of Special Education and Rehabilitative Services at the U.S. Department of Education.
This website is developed with grant funds. The information contained on these pages does not necessarily reflect the policy or position of the U.S. Department of Education or the Grantee and no official endorsement of the information should be inferred.