Leah Karpen Emergency Loan Fund

Policy Number: 47

• Approval Authority: Chancellor
• Policy Type: University Policy
• Policy Owner: Chancellor's Office
• Responsible Office: Human Resources - 828.251.6605

Revision History

Purpose

The emergency loan fund was established through a generous gift in the name of Leah Karpen and other donors. The purpose of the fund is to provide UNC Asheville permanent employees with a low interest alternative to borrow small amounts for emergency situations. This policy establishes the guidelines for requesting and approving emergency loans granted through this fund.

Scope

Faculty and staff members in permanent positions who have been employed by UNC Asheville for at least nine (9) months are eligible to apply for emergency loans. Emergency loans are not available to probationary, temporary or student employees. Emergency loans also are not available to any employee with one or more active written warnings, or to employees who have given or received notice of separation from employment at UNC Asheville.

Policy

Permanent faculty and staff members may apply for a loan for emergency situations where small amounts of money are needed to pay unplanned, unexpected expenses.

Some examples of emergency situations may include, but are not limited to, the following: unexpected doctor or dentist bills, travel expenses due to a death in the family, unexpected repairs such as a furnace, air conditioner, utility payments, etc. Documentation will be required to substantiate requests for an emergency loan. Denial of a loan is not grievable.

A peer review committee of seven members, representative of the campus community (i.e. SPA, EPA Non-Faculty, Faculty, and the divisions), is appointed to review loan requests greater than $250 and/or second loan requests. A Human Resources staff member chairs the committee and the paperwork associated with the loans will be coordinated by Human Resources. When a vacancy or extended absence on the committee occurs, the Vice Chancellor of the division represented by the vacating member recommends a new appointee.

Procedures

Completion of Loan Request

1. Employees wishing to utilize the emergency loan fund must complete a request form. The request forms are available through Human Resources and are also available on the HR website.

2. The completed request form must be returned to Human Resources for approval and processing. Human Resources staff will be available to assist employees with completing the request form.

Requests for Loans of $250 or Less

1. First time requests for loans of $250 or less can be reviewed and approved by Human Resources personnel.
2. Approved first time loans of $250 or less will ordinarily be available the workday following approval of the written request by Human Resources.
3. Loans of $250 or less must be repaid in 12 months or less.
4. Loan payments will be rounded up to the next five dollar increment.
5. Interest will be calculated on the monthly outstanding balance and will be collected with the final loan payment.
6. Repayment will be made through payroll deductions.
7. Additional payments can be accepted outside of payroll deductions.

Second Requests or Requests for Loans Greater Than $250

1. Second requests and/or loans greater than $250 are reviewed by the anonymous peer committee for approval if the loan request meets the following guidelines:

• The principal amount of the outstanding loan balance cannot exceed $1,000 at any time, and
• an employee cannot borrow more than $1000 in a 12-month period^[1], and
• An employee can request a maximum of 2 loans in a 12-month period.

2. A majority (4 out of 7 members) of the committee must approve requests for loans between $251 and $1,000.
3. For loans requiring review by the committee, the review process will generally require up to five (5) working days from the date the written request is received by the Human Resources office.
4. The Human Resources office will notify the individual regarding the committee’s decision.
5. The check for an approved loan will be available the next working day following approval of the loan.
6. A loan of more than $250 must be repaid in 12 months or less.
7. Loan payments will be rounded up to the next five dollar increment.
8. Interest will be calculated on the monthly outstanding balance and will be collected with the final loan payment.
9. If a second loan is granted to an employee with an outstanding loan:

• The new combined outstanding balance must be repaid within 12 months or less.
• Interest to date on the existing loan will be calculated and added to the outstanding balance of the loan. The new loan payment amount will be calculated on the combined principal balance of both loans and the total unpaid interest.

10. Repayment will be made through payroll deductions.
11. Additional payments can be accepted outside of payroll deductions.

Maximum Outstanding Loans and Break between Loans

1. An employee can have no more than two (2) emergency loans at any one time.
2. Once an employee has two (2) outstanding emergency loans, he or she cannot request another emergency loan until both outstanding emergency loans have been paid in full.
3. If an employee has a second loan granted before a first loan is paid in full, there must be a six (6) month break from the time both loans are paid in full before the employee can request another emergency loan.
4. Documentation will be required to substantiate requests for an emergency loan.
5. If a third loan is granted within a two-year period, a condition of the loan will be a mandatory referral to the employee assistance program.

Time-Limited Employee Loans

Emergency loans to employees in time-limited positions can be made under the same conditions as loans to other employees except for the repayment period, which will be determined as follows:

1. If the employee’s time-limited position extends beyond 12 months, the repayment period can be up to 12 months.
2. If the employee’s time-limited position ends in less than 12 months, the repayment period must be at least one (1) month less than the number of months remaining in the employee’s position. For example, if a time-limited position ends in 10 months, and the employee requests and is granted an emergency loan, the minimum amount of the monthly payroll deductions will be the principal amount divided by 9.

Interest Calculation

1. All loans will be subject to an annual percentage rate (APR) of 8% (.67% per month).
2. Compound interest will be calculated for each month, but will be collected as the last payment on the loan.
3. The minimum interest charge will be one month’s interest even if the loan is repaid in full within one month.

Below is an example of the interest calculation:

• Amount borrowed: $250
• Interest first month: $250 x .67% = $1.68
• First month interest calculation: Payment amount $50, Principal $48.32, Interest $1.68. Outstanding balance for the next interest calculation $201.68.
• Second month interest calculation: Payment amount $50, Principal $48.65, Interest $1.35. Outstanding balance for the next interest calculation $153.03.

Separation

1. If an individual’s employment with UNC Asheville is terminated or if the employee voluntarily leaves his position, the balance (both principal and interest) of any outstanding emergency loan is immediately due and payable.
2. The employee must agree in writing that should his/her employment with UNC Asheville end, UNC Asheville will have the right to collect the balance of any outstanding emergency loan plus accumulated interest from the employee’s last check or other means necessary.
3. If an employee fails to pay or make arrangements to pay his outstanding loan balance at separation, UNC Asheville will have the right to turn the account over to an outside collection agency. The employee will be responsible for paying any collection fees or costs if use of an outside collection agency is required.

Confidentiality

All requests for loans from the Emergency Loan Fund will be kept confidential. No record of these loans will be placed in the employee’s file unless special circumstances arise with regards to the lack of payment during repayment periods.

Policy Review and Updates

This policy is subject to periodic review and updates.

Procedural Questions

Employees with questions regarding the Emergency Loan Fund should contact Human Resources by calling (828) 251-6605 or by writing to:

UNC Asheville
Human Resources
Phillips Hall - Room 116, CPO# 1450
One University Heights
Asheville, NC 28804-8503

Disclaimer

The University of North Carolina at Asheville reserves the rights to change or modify terms and conditions, and/or request any relevant information that pertains to this policy at any time. If the university experiences a large volume of outstanding loans, funds may not be available to grant loan requests.

Associated Forms:

Emergency Loan Request Form [3]

Truth in Lending Act (TILA) Disclosures [4]

Loan Repayment Agreement [5]

¹For example: an employee is granted a $300 emergency loan in March. In August the employee requests another emergency loan. The maximum amount of the second loan request can be only $700. This will get the employee to the $1,000 maximum that can be requested within a 12 month period. The current outstanding balance of the first emergency loan is not relevant to this determination. Rather it is the total of the requests within the last 12 months that must not exceed $1,000.

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Associated Forms

Emergency Loan Request Form [3]

Truth in Lending Act (TILA) Disclosures [4]

Loan Repayment Agreement [5]