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Brief Overview of Assistive Technology Loan Programs
As of 2000, Assistive Technology Financial Loan Funds had been established
in 31 states These programs vary considerably in terms of administration
and resources but all share the common goal of helping people with disabilities
(many of whom are low income) access affordable credit in order to purchase
the AT needed to improve quality of life and outcomes with respect to
education, employment and independent living.
Loan Products & Special Features:
- AT Loan Funds provide loans for assistive technology devices (meaning
any device that maintains or enhances functional capabilities. Most
loan funds also cover related services such as AT evaluations, training,
maintenance and repair (an estimated 1 in 3 borrowers purchase services
in addition to devices). Most AT Loan Funds also cover home and vehicle
accessibility modifications. A few programs provide loans to businesses
for employment accommodations and accessibility modifications.
- The most commonly purchased items include: personal computers and
adaptive computer hardware and software, vehicles and vehicle accessibility
modifications, Closed Circuit TV's and other aids for individuals with
low vision, hearing aids (often excluded from coverage in insurance
policies), mobility aids (scooters, power chairs, lifts) and, in states
which cover such items, home modifications.
- A number of loan funds offer special features and services reflecting
the special needs of AT users ? many of whom are low income. Such services
and features include: advice and counseling on AT selection and on alternative
funding sources for assistive technology (such as Medicaid, Medicare,
private insurance, vocational rehabilitation services,etc.); referral
to AT professionals, consumer credit counseling; interest rate and principal
buy?downs to make loans affordable, flexible loan terms, assistance
with loan packaging and coordination with other funding sources and
options including social security work incentive programs. At least
one state is also developing an IDA savings program.
Loan Fund Administration:
- Eighteen states have loan guarantee funds meaning that the dollars
they raise are used to guarantee loans made by commercial lending institutions
? usually banks and, in a few states, credit unions. Thirteen states
operate revolving loan funds.
- AT Loan Funds are administered by state agencies or nonprofits (often
in collaboration with commercial Banks) in about half the states. In
the other states, the Funds are administered by the lending institution.
All but five of the states partner with a commercial lending institution.
- Loan fund capacity varies considerably. Many loan funds are fairly
small ($100,000 ? $500,000) ? reflecting their status as "start?ups."
Funds with the largest capacity include Connecticut ($3 million), Virginia
($4 million) and Maine ($6.5 million). Other states with significant
capacity include Kansas ($1.2 million), Maryland, Missouri and Utah
($1.0 million) and Nevada ($1.2 million).
- The number of loans made annually varies considerably from state to
state. The largest number of loans are made in Maine. (130/year) and
Connecticut, Maryland and Virginia (all of which make between 70 and
75 loans per year). Kentucky, Pennsylvania, Idaho and Vermont make between
25 and 35 loans per year. The rest of the programs make less than 25
loans per year ? a reflection of the "start up" status of
many of these programs. Allowable loan amounts range from a low of $50
to as high as $100,000 in Maine (which also pays for home modifications
and employment accommodations). Average loan sizes vary from a low of
$2500 in Vermont to a high of $15,000 in California. Nation?wide the
average loan size is approximately $7,500. Loan terms range from one
to ten years (20 years for home equity loans in Virginia) typically
depending upon a combination of factors including the size of the loan,
the expected life of the AT purchased and the borrower's income stream.
Interest rates range from zero percent (for low?income consumers in
Maine) to a high of prime plus 3%. Default rates in all but a few states
have been very low. Many states have experienced no defaults to date
(13 out of 25 states reporting) and most report extremely low rates
(e.g., 3 out of a total of 118 loans in Connecticut, 4/96 in Idaho,
25/931 in Maine, 8/120 in North Carolina, 1/123 in Ohio, 4/90 in Utah,
4/300 in Vermont).
Financing:
AT Loan Funds have been financed with donations from private foundations
and other contributors including commercial lending institutions and with
state and federal grants. Illinois' AT Loan program is part of a linked
deposit program. Maine's program, the largest in the nation, was established
with two bond issues ?providing a total of $6.5 million in lending capital.
Federal funding for AT loan programs is now available through Title III
of the Assistive Technology Act of 1998. Six states received Title III
funding in 2000; 14 states (including four of the six funded in 2000)
received Title III funding in 2001. President Bush has requested expanded
funding (up to $40 million) for this fiscal year.
Outcomes:
A recent report on Assistive Technology Loan Funds in other states confirms
that low interest loans are an effective tool for helping people with
disabilities overcome financial barriers to AT. Sixty three percent of
the 508 applicants studied had applied for a low interest loan after being
denied AT financing through at least one other source -- for example,
Medicare, Medicaid, Vocational Rehabilitation or bank loans. Most of the
loan applicants were poor. Seventy percent were unemployed and only 19
percent were employed fulltime. Median monthly income was just $1,711.
And yet, nearly 78 percent of all loan applications were approved for
loan amounts ranging from $79 to $90,000. The most common requests were
for transportation, seating and mobility, computers and environmental
modifications. You can find the full report on the RESNA Alternative Financing
Technical Assistance website at http://www.resna.org/AFTAP/loan/afpsummary.html.
For more information: RESNA
Alternative Financing Technical Assistance Project
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