Exhibit 31.2



CERTIFICATION PURSUANT TO SECTION 302

OF THE SARBANES-OXLEY ACT OF 2002



I, Louise B.
Sehman, certify that:



1. I have reviewed this quarterly report on Form 10-QSB
of KH Funding Company;



2. Based on my knowledge, this quarterly report does
not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by
this quarterly report;



3. Based on my knowledge, the financial statements, and
other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the small business issuer as of, and for, the periods presented in this quarterly
report;



4. The small business issuers other certifying officers and I
are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d -14) for the small business issuer and we have:



| | a. | designed such disclosure controls and procedures to ensure that material information relating to the small business issuer, including its consolidated subsidiaries, is made known to
us by others within those entities, particularly during the period in which this quarterly report is being prepared;
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| | b. | evaluated the effectiveness of the small business issuers disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the
Evaluation Date); and
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| | c. | presented in the quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;
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5. The small business issuers other certifying officers
and I have disclosed, based on our most recent evaluation, to the small business issuers auditors and the audit committee of small business issuers board of directors (or persons performing the equivalent functions):



| | a. | all significant deficiencies in the design or operation of internal controls which could adversely affect the small business issuers ability to record, process, summarize and
report financial data and have identified for the small business issuers auditors any material weaknesses in internal controls; and
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| | b. | any fraud, whether or not material, that involves management or other employees who have a significant role in the small business issuers internal controls; and
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6. The small business issuers other certifying officers
and I have indicated in this quarterly report whether there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any
corrective actions with regard to significant deficiencies and material weaknesses.



|                        |  |                                                 
|----------------------- |  | ------------------------------------------------
|Dated November 12, 2004 |  | /s/ Louise B. Sehman                            
|                        |  | Louise B. Sehman                                
|                        |  | Chief Financial Officer, Secretary and Treasurer