Updates

2023 Legislative Conference & 2023 Annual Convention

AILA Members:  Please mark your calendars now for two upcoming events that have become hallmarks of our Association:

First, our 2023 Legislative Conference will occur Tuesday, March 21^st, in Montgomery, AL.  This is our annual opportunity to catch up with our Legislators and their staff at the beginning of each year’s legislative session.  The reception following our meeting, gives us the opportunity to speak to our legislators while topics and issues facing our Industry may be brewing.

Second, our 2023 Annual Convention will begin Thursday, June 15^th, in Biloxi, MS.  We will be at the Beau Rivage Hotel & Casino this summer.  This is the meeting where we discuss developments important to the consumer finance industry, and where we get critical one-on-one time with our Legislators and their families.  This annual event has done more to cement a great working relationship with our Legislators than anything else we can do as an Association.  Registration details about the Convention will be coming soon.

Please attend both if you possibly can!  I look forward to seeing you soon.

-Maury

Inflation Reduction Act of 2022

AILA Members and Friends: One benefit of being part of the world’s largest law firm, is to find expertise everywhere throughout our firm!

My partners have put together a readable summary of the recently enacted Inflation Reduction Act of 2022. I pass it along to you in case you are interested.

-Maury

August 10, 2022

On Sunday, August 7, 2022, after a rare and grueling weekend session with nearly 16 hours of voting on amendments, the US Senate passed H.R. 5376, the Inflation Reduction Act of 2022 (IR Act) by a partisan 50-50 vote, with Vice President Kamala Harris breaking the tie in favor of the bill. The House is expected to return early from recess and consider the measure on Friday, August 12.

The IR Act, if approved by the House, represents a major victory for congressional Democrats heading into the November midterm elections.

READ THE COMPLETE ARTICLE

A Message From AILA President Shane Turner!

Good morning everyone,

I am pleased to report that Governor Ivey has signed HB335, now Act #2022-207, a copy of which is attached. The Act is now effective to allow a closing fee on loans made under the “Alternate Rate” (section 5-18-15(m)) of the Alabama Small Loan Act. The closing fee allows for a 4% fee up to $50 on loans made under the “Alternate Rate” up to $1500. Below is the bill language.

(7) In addition to the acquisition charge provided under subsection (m) (l), the licensee may collect a closing fee in an amount not to exceed the lessor of four percent of the loan amount or fifty dollars $50. The closing fee may be paid from the proceeds of the loan and financed by the licensee.

(8) Upon the prepayment in full of any loan under this subsection, any closing fee collected shall be subject to subsection (d), as it relates to refunds, provided, however, that the licensee may retain up to twenty-five dollars $25 of the closing fee. 

The Act specifically provides that it applies to loan contracts entered into after the effective date, which is immediately following approval by the Governor.  In other words, the Act is now law.

Our Alabama Small Loan Act licensees owe a great debt of gratitude for all of the hard work by legislators and our professionals and volunteers who have spent long hours in this legislative session in Montgomery. First and foremost, we thank Rep. Chris Blackshear and Senator Will Barfoot for their leadership in drafting and shepherding the bill through the House and Senate. Our House vote was 73-13, and in the Senate, it passed 32-0. I also want to recognize our outstanding lobbying team of John & Tami Teague and Jerry Spencer. Our member volunteers on the ground were spearheaded by myself and Whit Wright.  Jim Rawls, Kevin Gardner, Gene Smith,  Brenda Ford, Holly Munoz, and Rick Davis were also there to help. And, thanks to all of the member companies that helped financially.

A great Team is needed to make things happen. I want to thank everyone that helped with this legislation.

Click Here For A Copy of Act #2022-207

Sincerely,

Shane Turner

May 20, 2020

AILA Members and Friends: Please find below a message sent out today from the American Financial Services Association that addresses Paycheck Protection Program loan uncertainty. Thanks to our friends at AFSA for keeping us up to date on developments. Please let me know if you have any questions.

Maury

AFSA is continually updating its Coronavirus Resource Page with Federal / State Government Affairs materials, including maps, policy updates and federal and state guidance. Please check back often. If you require additional information, contact Dan Bucherer at dbucherer@afsamail.org.

Some Legal Clarity on PPP Loans?

With the uncertainty around the Small Business Administration’s (SBA) Paycheck Protection Program (PPP) and the extra scrutiny that the Administration has promised, we understand that some members may be considering returning the funds they received.

While AFSA doesn’t offer legal advice and you should consult your own attorneys, you may want to review a recent decision out of a U.S. district court in Michigan before doing so. The court issued a preliminary injunction barring the SBA from enforcing a rule to exclude businesses that present live performances or sell products of a “prurient sexual nature” from loans under the PPP. While that’s obviously not the business that AFSA members are engaged in, the judge also said the SBA cannot exclude other businesses, i.e. banks, because Congress intended to support all qualified small businesses, including those it might have “disfavored” before the coronavirus hit.

The ruling can be reviewed here. The district court noted that, “The COVID-19 pandemic has decimated the country’s economy, and the PPP is an unprecedented effort to undo that financial ruin. More importantly, the PPP is an effort to protect American workers … and Congress could rationally have concluded that those workers need protection no matter the line of business in which they work.”

The ruling goes on: “[T]he text of the PPP makes clear that every business concern meeting the statutory criteria is eligible for a PPP loan during the covered period. Congress identified in the PPP only two criteria that a business concern must satisfy in order to qualify for loan guarantee eligibility: (1) during the covered period (2) it must have less than 500 employees or less than the size standard in number of employees established by the Administration for the industry in which the business operates.” U.S. District Judge Matthew Leitman wrote, adding, “Simply put, Congress did not pick winners and losers in the PPP…. It would ordinarily be absurd to conclude that Congress meant to provide financial assistance to, among others, certain sexually oriented businesses and private clubs that discriminate. But these are no ordinary times, and the PPP is no ordinary legislation.”

The decision may be appealed, but if it is not, it could provide the clarity that has been lacking in the SBA’s interim rules and FAQs. In addition, we’re awaiting a decision out of another U.S. district court in California. Payday Loan LLC, which engages in lending and check cashing in 22 stores in California, sued the SBA on April 25 after its request for a $644,000 forgivable loan was denied. The application was rejected on the grounds that PPP funds can’t be distributed to companies that profit mostly from making loans. A decision is expected soon.

However, it is unclear whether a decision will come before May 14, which is the date that companies can return PPP loans without paying a penalty. AFSA Staff is pressing the SBA to abandon the May 14 return deadline, or extend it, in light of the ongoing litigation and legislative efforts. Again, in considering your options and the needs of your business, we advise that you discuss these matters with legal counsel, and we will continue to keep you updated. If you have additional questions or concerns, please feel free to contact Celia Winslow at cwinslow@afsamail.org.

May 20, 2020

AILA Members and Friends: I want to share two pieces of news before the weekend.

First, the United States District Court for the Western District of Texas has continued its stay in the case involving the CFPB Small Dollar Rule. This means that those installment lenders who are concerned about the use of leveraged payment mechanisms bringing them within the application of the Rule, have more time to consider the matter. Wednesday’s Order is copied above.

Second, for those installment lenders who received PPP loans of less than $2.0 million, and may have been concerned about their certification of eligibility, we learned earlier this week that the U.S. Treasury has issued an advisory that such certifications will not be subject to challenge.

Please stay safe and vigilant as we begin to unfurl.

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Maury

May 27, 2020

AILA Members and Friends:

Supervisor Corscadden reported today that the Alabama State Banking Department will begin conducting remote in-state exams in the near future. Examiners will contact a branch via email or phone. Exams will be streamlined as much as possible, focusing the review on disclosures, paid-outs and insurance claims. While BOL examiners will not complete their review on-site, they will go to the assigned branch location to pick up records, such as the “State Examiner files” of disclosures and paid-outs, and insurance logs, which will be returned upon completion. The Department will be looking for our cooperation.

Maury

May 26, 2020

AILA Members and Friends:

Above is a link to a press release containing a joint agency statement. I just find it so interesting and ironic [and frankly infuriating] that the federal agencies that once attacked banks and credit unions for their “short term” lending are just now waking up to the reality of the needs and preferences of America’s consumers. We have always said that traditional installment lenders offer the best and safest financial products to our customers. And, there is a very real difference between traditional installment loans on the one hand, and payday/title loans on the other.

I do hope you enjoy a nice Memorial Day Weekend. Always remember that Memorial Day is our time as Americans for honoring the men and women who died while serving in the U.S. military. We live free today because of the sacrifice of so many who came before us.

https://www.fdic.gov/news/news/press/2020/pr20061.html

Maury

April 24, 2020

AILA Members and Friends:

I want to send this brief note to clarify what may be a misconception concerning the granting of “accommodations” and credit reporting duties during the pandemic.

The CARES Act does have a section addressing credit reporting obligations on furnishers of data to a Credit Reporting Agency (“CRA”). Specifically, if an accommodation (forgiveness of payments, forbearance of payments, etc.) is granted to a customer, and the customer meets his or her obligation pursuant to the accommodation, then what would otherwise be a delinquent account must be reported as “current” (with limited exception). However, nothing in the CARES Act requires that a creditor offer any accommodation to a customer.

Please work with your CRA to make certain that you continue to report properly under the Fair Credit Reporting Act, as amended by the CARES Act.

I hope that you continue to weather the storm safely. Please let me know if I can answer any questions for you.

Maury

April 16, 2020

AILA Members and Friends:

On the “loan” side of this pandemic, I have focused on the Paycheck Protection Program and the potential for licensees to get loans under that program. However, there is another set of pandemic loan opportunities for the larger licensees known as the “Main Street Loan Facilities.” Please see my law firm’s COVID-19 Blog below for details. If your company qualifies, these programs may prove helpful.

Maury

April 15, 2020

As businesses begin to receive funding of loans under the Paycheck Protection Program, it is vitally important to properly track the spending of the proceeds and accumulate the necessary documentation that will be needed for calculating the amount of any loan forgiveness.

A business may receive forgiveness of a loan issued under the Paycheck Protection Program if the business can demonstrate that it paid and incurred covered costs during the 8-week period beginning with the date of the origination of the covered loan. The Frequently Asked Questions document currently posted on the website of the United States Treasury states that the 8-week period begins on the date the lender makes the first disbursement of the Paycheck Protection Loan to a borrower. Covered costs include certain payroll costs, payments of interest on a covered mortgage obligation, payments on any covered rent obligation and payments of a covered utility payment. The Small Business Administration stated that a business receiving a loan under this program must spend at least 75% of the proceeds on payroll costs.

In addition to the requirements regarding allowable expenses, the amount of any potential loan forgiveness is decreased if the business reduced the number of its employees as measured before and after the loan is received. The amount of the forgiveness is also reduced by the amount of any reduction of total salary or wages of any employee paid in the covered period in excess of 25 percent of salary and wages of the employee paid during the most recent full quarter in which the employee was paid before the covered period. This provision applies to any employee who was not paid, during any single pay period during 2019, wages or salary at an annualized rate of pay in an amount more than $100,000. The Act does include certain provisions which allow for restoration of head-count by June 30, 2020.

Given the nature of the forgiveness, businesses should immediately create accounting systems which will track the use of the funds with a focus on the documentation that will be required upon application for forgiveness. Given that the loan funds must be spent on covered payroll costs, rent, interest on covered mortgages and utilities, businesses should, as practically as possible, pay for those expenses directly from the loan proceeds. Businesses should consider segregating the loan proceeds into a separate bank account to allow for tracking of unspent proceeds and better demonstration of spending on allowable costs. Alternatively, for businesses already processing payroll from a separate bank account, a business could also reimburse the payroll directly from a segregated bank account that had been established for loan tracking purposes.

While it is likely additional SBA guidance will be issued which will provide more clarity regarding loan forgiveness and what is needed to support the loan forgiveness application, the CARES Act provides that loan forgiveness applications will include items such as:

Documentation verifying number of full-time equivalents on payroll and pay rates for the periods including:

• Payroll tax filings reported to IRS;

• State income, payroll and unemployment insurance filings.

Documentation including cancelled checks, payment receipts, transcripts, or other documents verifying payments on covered mortgage obligations, covered lease obligations and covered utility payments.

Businesses receiving an Economic Injury Disaster Loan (EIDL) and a Paycheck Protection Program loan should also ensure that funds received from the two programs are not utilized to pay the for the same expenses.

Please don’t hesitate to contact us if you have any questions or if can assist in helping you track expenditures under this loan program.