ALTERNATIVE FINANCIAL SERVICE PROVIDERS ASSOCIATION
November 17, 2020
The Gateway For Payroll Data
SBA gets temporary stay on PPP, EIDL borrower disclosures
UPDATE: Nov. 14, 2020: A federal judge granted the Small Business Administration (SBA) a temporary stay Friday, saying the agency won’t have to release the names and loan amounts of all PPP and EIDL borrowers. The five media organizations that sued the SBA for the information have until Nov. 27 to respond to the merits of the agency’s request for a full stay.

The National Federation of Independent Business (NFIB) echoed the SBA’s concern for borrowers’ privacy, asking the Justice Department in a letter to appeal the judge’s Nov. 5 order to reveal the names and loan amounts.

“If the Court order stands, the government’s ‘reward’ to small businesses that stepped forward will be to plaster their names, addresses and loan amounts across the newspapers, bringing them unwanted attention and potentially harassment from third parties,” David Addington, general counsel for the NFIB, wrote in the letter, according to The Wall Street Journal.
Paving the Payments Future
Lenders face tough decisions as commercial bankruptcy filings mount
"What I think might be the surprise of 2021 to lenders is the value of their collateral is going to be less than what they think it is, at least in the distressed spaces," attorney Jim Lodoen said.

Commercial Chapter 11 filings rose 30% year-over-year in October, with 6,081 new filings compared with 4,677 in the same period last year, according to data from legal services firm Epiq AACER. 

Although the number of filings dropped to 550 in October from a September peak of 749, the resurgence in coronavirus cases and the uncertainty surrounding the size and timing of a second stimulus package threaten to reverse that downward trend in 2021, said Jim Lodoen, a partner in law firm Spencer Fane's bankruptcy, restructuring, and creditors’ rights practice group.

That means lenders will have to make tough decisions regarding distressed borrowers in the months ahead, he said. 
Lending as a Service
The Legacy of Employment & Income Verification
While Ronald Reagan popularized it, the famous trust but verify term has its genesis in a Russian proverb. Truth has always been hard to come by. That makes verifying the claims and statements made by individuals essential to running a business in today's climate.

Verification of a person's employment and income is nothing new. Governmental agencies, as well as businesses (from lenders to insurers to employers themselves) have been conducting these verifications for as long as documents have been falsified. The most basic way to conduct this type of verification is to communicate with the employer directly and just ask. Said another way, If 'Sara' is applying for a loan from 'Bank A' and Sara states that she makes $55K a year working at the Olive Garden, Bank A will contact the Olive Garden and make sure Sara's claim is valid.
UPDATE!

IRS extends Economic Impact Payment deadline to November 21 to help non-filers

WASHINGTON — The Internal Revenue Service announced today that the deadline to register for an Economic Impact Payment (EIP) is now November 21, 2020. This new date will provide an additional five weeks beyond the original deadline.

REACH 2020 Conference Coverage: Why Do So Many CU Members Go to Payday Lenders?
ONTARIO, Calif.–Why do so many people who are already credit union members or bank customers still go to payday lenders? And what can CU leaders do to better help these borrowers?

Credit unions were given some answers and insights into both those questions in remarks by Alex Horowitz, a researcher for Pew Charitable Trusts’ consumer finance project, to the California and Nevada Leagues’ Virtual REACH 2020 Conference.

Horowitz said the typical payday borrower earns $30,000 a year, or $2,500 a month or approximately $15 per hour. For many their income is volatile.

“More than 80 million Americans are paid hourly. They may have enough income to get through the year in aggregate, but maybe not at any one point in time,” he said. “That’s a lot of what people using alternative financial services are solving for.”
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For America’s Unbanked, Mobile And Digital Save The Day
A recent Federal Deposit Insurance Corp. (FDIC) study found that the number of unbanked U.S. consumers will likely start rising again as a result of the pandemic recession. Keeping these consumers engaged in the broader financial system is essential to the collective good.

PYMNTS’ November 2020 Disbursements Tracker®, done in collaboration with Ingo Money, states that “FIs that support digital and mobile payment tools could help these consumers access financial solutions without using traditional accounts, but many FIs must address age-old challenges before they can roll out such tools.” What are those challenges?

In a word, “legacy.” Systems, that is. Banks and financial institutions (FIs) have been layering patches and tools on top of outdated core banking systems for so long that it’s become a Frankenstein’s monster of tech entanglement. New approaches are about simplicity.
Deutsche researchers propose 5% tax on remote workers, post-pandemic
  • Americans who work from home voluntarily after the coronavirus pandemic should pay a 5% tax that will, in turn, be given to those who cannot work remotely and earn less than $30,000, Deutsche Bank researchers proposed this week in an in-house magazine.
  • Assuming remote workers earn $55,000 a year on average, the tax would represent about $10 a workday, Deutsche researcher Luke Templeman wrote. Meanwhile, remote workers are saving on the costs of commuting, lunches out, clothes and laundry.
  • People would not be taxed if they are self-employed, are low earners, or working from home under government recommendation. Further, if their employer does not offer them a permanent desk, the employer would pay the tax under the Deutsche scenario. This can be audited by coordinating with company travel and technology systems, Templeman wrote.

The pandemic has made the racial retirement gap worse. Here's how individuals can close it.
Closing the racial retirement gap for people of color, even in this pandemic, could begin with broadening access and financial education.

Families of color were already trailing their white peers in retirement savings.

Then the coronavirus pandemic hit, adding a further hurdle to retirement planning for communities of color in the U.S.

More than 60 percent of Hispanic households are at risk of being unable to maintain their current standard of living in retirement, along with 54 percent of Black households and 48 percent of white households, according to the latest available data from the National Retirement Risk Index calculated by the Center for Retirement Research at Boston College.
What is unsecured debt?
Unsecured debt is a type of debt that does not use collateral to secure the loan. Things like car loans and mortgages are considered secured debt, since the car or home could be repossessed if you don’t pay back the loan. Personal loans, on the other hand, are often considered unsecured debt, because they don’t have that same risk.

What is unsecured debt?
Unsecured debt is any debt that does not have collateral backing — in other words, a lender cannot repossess or foreclose on an asset you own. Since the debt does not have an asset attached to it, it’s riskier for the lender. To compensate for this risk, lenders usually charge higher interest rates.

The interest rate charged on your unsecured debt is based on your creditworthiness. If your credit is good to excellent, you’ll qualify for the best rates.
Republican lawmakers are requesting lenience for PPP lenders
Republican senators have asked regulators to excuse banks that participate in federal coronavirus relief programs from additional regulatory scrutiny, American Banker reports.

Specifically, lawmakers want to ensure that smaller banks and credit unions whose asset totals may have swollen as a result of making Paycheck Protection Program (PPP) loans don't face heavier regulatory burdens like those that apply to financial institutions (FIs) with over $10 billion in assets under the Dodd-Frank Act. The concerns have been received sympathetically by vice chairman of the Federal Reserve Randal Quarles and acting comptroller of the currency Brian Brooks.

Financial regulators' receptiveness to the proposals reflect their inclination to reduce red tape for banks and businesses grappling with the coronavirus pandemic. Last week, the Consumer Financial Protection Bureau (CFPB) issued a no-action letter to Bank of America for its new small-dollar loan offering, meaning that the bank is unlikely to see supervisory or enforcement action from the bureau for the offering.
Western Union will end its remittances business to Cuba on Nov. 27
Western Union announced on Friday it will end of its operations in Cuba as of Nov. 27, following the Cuban government’s refusal to transfer remittance operations to a company not controlled by the military, as required by the Trump Administration.

The United States announced at the end of September that it would impose sanctions on American companies that do business with Cuban military entities, a measure that directly impacts Fincimex, a subsidiary of GAESA, the Cuban military conglomerate that controls, among other things, the remittances business.

“Today we inform our clients that they have a time limit to send money to their loved ones from the United States to Cuba, due to a new rule of the United States government that will take effect on November 26, 2020,” a Western Union spokeswoman told el Nuevo Herald.
DOJ challenge to Visa-Plaid deal could change financial services landscape
The outcome will decide how the industry might evolve in an ever-changing world of technology — through acquisition of small, innovative fintechs or organic growth, an antitrust attorney said.

The Justice Department's announcement last week it would block Visa's $5.3 billion acquisition of Plaid has the potential to change the landscape of the financial services industry, said Pahl Zinn, an antitrust attorney for Dickinson Wright.

"The outcome of this case will decide how the financial services industry might ultimately evolve in an ever-changing world of technology — acquisition of small, innovative fintechs or organic growth," he said.

The coronavirus pandemic has already brought significant changes, such as the acceleration of contactless transactions and a glut of online sales as the nation practices social distancing, Zinn said.
ALTERNATIVE FINANCIAL SERVICE PROVIDERS ASSOCIATION
Alternative Financial Service Providers Association
757.737.4088
315 Tuscarora St., Lewiston, NY 14092