FEDERAL AWARD FINDING: Community Development Financial Institution Program – Financial Assistance CFDA No. 21.020; Grant No. 221FA059863 2024-001 Reporting - Performance Goals and Measures CONDITION: LHOME did not meet the established performance goals and measures as required under the terms and conditions of the federal award. Specifically, LHOME failed to achieve the benchmark of $437,500 in qualified loan fund disbursements for this federal award. LHOME disbursed $125,000 in qualified loan funds for this federal award for the year ended December 31, 2024. CRITERIA: As required by the Community Development Financial Institution (CDFI) Program regulations, LHOME is required to comply with certain performance goals. CAUSE: External factors were present as LHOME expressed challenges due to many prospective borrowers facing restricted cash flow which limited their ability to qualify for larger loans that would support both the prospective borrower’s business profitability and ongoing debt service. LHOME also noted that declining consumer confidence and increased inflation contributed to the lower demand and requests for smaller loans. EFFECT: LHOME’s noncompliance impedes CDFI’s ability to assess program success and can result in imposed sanctions on LHOME by CDFI. CONTEXT: During our review of LHOME’s performance progress reports submitted to CDFI, we became aware that LHOME did not meet its required performance goals and measures. RECOMMENDATION: We recommend that LHOME attempt to expand its target reach by increasing marketing and by optimizing its products and services to appeal to new customers/borrowers. LHOME could also collaborate with CDFI and their recommendations on meeting federal program benchmarks when external factors are present and influential. VIEWS OF RESPONSIBLE OFFICIALS AND PLANNED CORRECTIVE ACTIONS: Management acknowledges and agrees with the finding. LHOME will request a grant amendment to decrease Performance Goals and Metrics (PG&M) to align with the actual cash award, strengthen market outreach and partner referrals, enhance borrower readiness through targeted development services, and explore the development of a business incubator designed for existing businesses with growth potential, offering technical assistance, mentorship, and access to financing pathways.