Updated April 4, 2008

NatLUST's "carrying costs" are (a) the cost of its borrowed funds, plus (b) the cost of managing the program, allocated against each claim based on the number of days the claim is outstanding.

NatLUST can borrow money less expensively than typical businesses because it is deemed a quasi-governmental lending program. For example, as of April 1, 2008, our cost of borrowed money ranges from 4.% to 4.61% on an annualized basis, whereas the bank prime rate is 5.25%. Kindly note that our cost of funds fluctuates from month-to-month depending on changes in market interest rates.

While NatLUST's cost of funds is attractive, the recent 501(c)(3) certfication by the IRS will allow us to switch to less expensive tax-exempt bonds. We expect this to happen later in 2008, once we cross the break even amount needed to justify the issuance expense of selling bonds. In comparison to our 6% taxable cost-of-funds, the switch to tax-exempt financing would lower our marginal borrowing cost to well below 4%.

Historical carrying costs:

Virginia
Connecticut
Illinois