September 26, 2025 Response to Findings – Views of Responsible Officials and Corrective Active Plan LHOME respectfully submits the following response to the federal award finding for the year ending December 31, 2024. Hicks and Associates, CPAs, PLLC 1795 Alysheba Way, Suite 6206 Lexington, KY 40509 Audit Period: January 1, 2024 – December 31, 2024 The findings from the FYE December 31, 2024, schedule of findings and questioned costs are discussed below and include LHOME’s management responses. Finding: 2024-001 Reporting – 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. RESPONSE: LHOME entered into a grant agreement in February 2023 to launch a new “strong roots” program. The grant performance goals and metrics (PG&M) were determined based on the grant application. The strong roots program supported loans to existing businesses with at least two years of operating history and focused on expansion. The minimum loan amount for the strong roots program was $50,000. The first period of performance (POP) ending December 31, 2024 and the goal was to disburse $437,500 through the strong roots program. The rules to prorate PG&Ms to match the cash award were not yet in place within the CDFI. LHOME successfully disbursed $125,000 in loans but below the goal of $437,500, creating the instance of non-compliance. No sanctions were imposed by the CDFI since this is the first POP for the grant. Response to Findings – Views of Responsible Officials and Corrective Active Plan - continued This shortfall is primarily due to the following factors: • CDFI rules require full achievement of goals stated in the application regardless of the awarded amount. Goals are not prorated to align with the actual cash award. • Restricted cash flow among prospective borrowers, limiting their ability to qualify for larger loans. • Declining consumer confidence and increased inflation, resulting in lower demand and a shift toward smaller loan requests. • Economic instability and increased delinquency rates on existing loans, creating additional pressure on organizational cash flows. • Launching a new loan product in a challenging economic environment, which required more time for market acceptance and borrower readiness. Corrective Actions: 1. Request a grant amendment to decrease Performance Goals and Metrics to align with the actual cash award. 2. Strengthen Market Outreach and Referral Networks • Expand marketing activities to increase awareness of the grant-funded loan product. • Partner with local banks, credit unions, business development organizations, and technical assistance providers to increase referrals and reach businesses that meet the loan size criteria. • Use targeted campaigns focusing on businesses with demonstrated growth potential. 3. Enhance Borrower Readiness and Capacity • Work closely with external development service providers to ensure their understanding of LHOME’s underwriting requirements. • Require external development to address cash flow issues, strengthen financial statements, and prepare borrowers to qualify for larger loans. 4. Develop a Business Incubator Program • Explore the development of a business incubator designed for existing businesses with growth potential, offering technical assistance, mentorship, and access to financing pathways. • Provide some structured support to help businesses scale operations to qualify for $50,000+ loans. Through the combined efforts of grant amendments, expanded marketing, targeted development, and stronger partnerships, LHOME is expected to meet performance goals and metrics for the CDFI compliance by the end of fiscal year 2025. Respectfully, Keith Talley, Sr President & CEO