**Exhibit
      31.2**




**CERTIFICATION
      PURSUANT TO SECTION 302**


**OF
      THE SARBANES-OXLEY ACT OF 2002**




I,
      William M. Baker, 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 officer 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, or caused such disclosure
      controls and procedures to be designed under our supervision, 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;




(b)
      evaluated the effectiveness of the small business issuer's disclosure controls
      and procedures and presented in the quarterly report our conclusions about
      the
      effectiveness of the disclosure controls and procedures, as of the end of the
      period covered by this report based on such evaluation; and




(c)
      disclosed in this report any change in the small business issuer's internal
      control over financial reporting that occurred during the small business
      issuer's most recent fiscal quarter (the small business issuer's fourth fiscal
      quarter in the case of an annual report) that has materially affected, or is
      reasonably likely to materially affect, the small business issuer's internal
      control over financial reporting. (d)




5.  The
      small
      business issuer's other certifying officer and I have disclosed, based on our
      most recent evaluation of internal control over financial reporting, 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 and material weaknesses in the design or operation
      of
      internal control over financial reporting which are reasonably likely to
      adversely affect the small business issuer's ability to record, process,
      summarize and report financial information; and




(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 control over
      financial reporting.





Dated:
                October 3, 2007
            /s/
                William M. BakerWilliam
                M. BakerChief
                Financial Officer