In accordance with AboutPaydayLoan.com the US senate has lately enacted a new bill of financial protection of customers, which has already been signed by Barack Obama. Under this bill a new consumer protection agency, named Consumer Financial Protection Bureau (CFPB), will be established. A number of businessmen are worried how the establishment of this Bureau, now called the Bureau of Consumer Financial Protection (BCFP), will affect their business. The main objective of the organization is to eliminate the consequences of the recent mortgage crisis and the economic recession, followed after that. The Bureau will control and monitor all the financial products, used by customers, even the products which have no attitude to the crisis. The measures conducted by the agency seem to be vast and are likely to affect most businesses, as well as payday lending companies like Solomon Internet Funding.
The most of the small companies care about the fact that there are practically no limitations of the power that the BCFP disposes. It seems that the agency will control all the types of loans, ranging from the loans for buying of appliances to the loans from dentistry, where customers can borrow money for purchasing braces or using some other dental services. If the bill wasn’t enacted so fast and unexpectedly for most businesses, they would have some time to examine what spheres of business and what financial products would be controlled by government in order to be ready for these new changes of regulation. Sad to say, but it didn’t happen and a number of businesses have to leave the market because of having no power to resist these severe conditions. E.g., due to the economic crises a lot of small furniture companies loss the profits because customers are trying to cut down their expenses on furniture. In order to avoid such problems companies offer their clients an alternative service. They provide a customer with a loan in-house by using the outside lending company. Through this service more than 50% of the company’s sales are conducted. The recent changes in regulation have made these alternatives very expensive, and no customer will agree on these conditions. A huge amount of small companies will have to finish their operations in numerous industries, which wasn’t prepared for the recession.
Payday lending industry is one of the most obvious examples of the strong regulation. A lot of States have already established a new annual percentage rate on payday loans, which is now 36%. This rate is much higher in comparison with other loans. On the other hand, for the $100 loan with 36% rate offered for 2 weeks lending companies can only receive $1.38. This meager money would never cover their operational expenses. Despite the fact that the new rate has made most payday lenders be similar to lending charity organizations, no State has provided further charity measures to the borrowers, whom the payday loans were given to. In his latest article attorney Hilary B. Miller deeply discusses and states his arguments why payday lending industry will survive and won’t disappear in spite of harsh regulation. These statements can be welcomed by the business owners and people engaged in the lending industry.
Although the future of many businesses is vague and doesn’t seem promising, the payday lending companies don’t lose hopes. These lenders give loans for small sums of money to those customers who don’t have reputable credit history and can’t receive loans in other places. Payday lenders just want to save their jobs and have some money in bank. Their customers are the least secure out of all the borrowers and that is why lenders need to charge them no less than $15 for the $100 loan to continue operating on the market. The number of complaints against these lenders can be decreased by common legislative acts, mostly aimed at extensions or rollovers of the loan. And if just these acts are passed, the demand for the payday loans and the number of borrowers won’t diminish, which means that the payday lending companies will go on prospering.