How a Small Loan is Adding Up to Big Impact for Homeowners in Northeast Ohio September 25, 2024

For older adults with fixed incomes and limited resources, covering the cost of home repairs often means making excruciating choices. Is it more important, for example, to buy food and medicine or to address an aging roof, leaking sinks, faulty outlets, or the many other components of a home that require periodic repairs or replacement?

Though completing the home repairs may be essential to ensure it remains a safe place for the resident to age in place over time, such projects are often deferred to meet the homeowner’s more immediate needs. And while they can often make do without completing small maintenance and repair projects in the short-term, homeowners’ quality of life can be significantly impacted as this cycle repeats over time and small issues snowball into far more costly and imposing barriers to remaining in their home.

For nearly 30 years, Rebuilding Together Northeast Ohio (RTNEO) has worked to support seniors in these circumstances, along with veterans and people with disabilities, by covering the costs associated with critical home repairs and coordinating contractors and volunteers to complete the work. A local affiliate of the national nonprofit Rebuilding Together, RTNEO serves a 13-county area that includes the cities of Cleveland and Akron. In the last year alone, RTNEO facilitated repairs to 443 homes, prioritizing projects that directly impact residents’ health and safety.

“Most of the people we serve don’t have the option to move, even if they want to, because of their financial situation,” says RTNEO President and CEO Rich Carpenter. “With housing prices what they are, they’re simply not going to be able to sell their existing home for enough money to afford a new, comparable home that’s in good condition. The services we provide mean that they don’t have to leave, giving them the opportunity to comfortably age in place in homes where most have lived for many years, which is beneficial for them and for the community at large.”

While not the organization’s explicit focus, one of the most significant community benefits of RTNEO’s work is the preservation of affordable housing options in the neighborhoods where it works. By helping older adults with limited resources remain in their homes, the organization is reducing demand for the subsidized rental housing options that many of its clients would rely on if forced to sell their homes and relocate. This also encourages residential stability in the neighborhoods where the homeowners live and helps to curb unchecked gentrification by preventing homes in need of repairs from being purchased and replaced by far more costly homes that are less affordable to aspiring homeowners.

On an individual level – whether facilitating small projects like the installation of handrails and grab bars for homeowners with mobility challenges or addressing larger structural issues to extend the lifespan of homes – the positive impact on the clients RTNEO assists can be profound.

“When I think about clients who exemplify why we exist, there are several who come to mind,” says Carpenter. “One is a couple in their late 70s, and the wife has severe mobility issues, but they took in four teenaged grandkids on a fixed income when their son couldn’t care for them anymore. We were able to help put a walk-in shower into their home, to fix the front porch to allow easier access, and to fix their roof and get rid of mold that was growing from a leak – all of which helped make their daily life easier and gave them a boost in being able to give their grandkids a better life.”

To fund its work and help homeowners like the ones Carpenter referenced, RTNEO relies primarily on public funding sources, with the U.S. Department of Housing and Urban Development (HUD), U.S. Department of Agriculture, the State of Ohio, and local municipalities like the Cities of Cleveland and Akron all regularly providing grants to RTNEO that sustain its work. Though the grants are a consistent source of revenue, they also create cash flow challenges for the organization, as much of its funding is provided through reimbursements after homes are repaired. With limited cash on hand to front payments, RTNEO long relied on a line of credit to help bridge the gap.

For several years, the organization’s line of credit was with a mainstream financial institution and carried a 9.5 percent interest rate. And while the terms with the bank enabled RTNEO to pay its contractors while awaiting grant reimbursements, a large, unexpected expense the organization was obligated to cover in 2021 required the nonprofit to tap the line of credit for far more than it had previously. Doing so created financial strain, which, in turn, made it more difficult for RTNEO to cover the costs of home repairs in a timely manner.

To regain the flexibility needed to continue expanding its impact by helping more homeowners in the region, RTNEO turned to IFF last summer for a loan of roughly $224,000 that helped the organization pay down its line of credit at a lower rate and provided bridge financing for one of the organization’s largest grants from HUD. Since the loan closed in June 2023, RTNEO hasn’t made a single late payment to any of its creditors, has been able to adhere to its goal to pay contractors for work performed within 30 days of the completion of home repairs, and is on track in 2024 to facilitate repairs to 550-600 homes in Northeast Ohio – a marked increase from each of the past two years.

“Contractors have been tough to come by since COVID, and if we’re not paying them in a timely fashion, they’re not going to be willing to work with us,” says Carpenter. “Because of the loan from IFF, we’re in more debt today than we were several years ago, but we’re paying less interest each month and our cash flow is significantly better. We’re not operating week to week, check to check anymore, and we’re a much healthier organization in a good position to help more homeowners age in place, with dignity.”

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