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Sean Murray: Alright, so a, a
bill was passed in Virginia

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oftentimes to talk about bills
that have been introduced. And

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some of them, they don't go
anywhere. So and it ends up

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being kind of like the boy who
cried wolf. We go up here and we

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say, hey, here's this new bill
that's introduced in this state,

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you better watch out because if
it passes, all these

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requirements are going to be put
in place, and then it dies in

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committee or never goes
anywhere. And it's just like

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onto the next one. And I
understand if people want to,

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you know, tune all that stuff
out, because if bills don't go

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anywhere, then why are we why
are we getting all worked up

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about it? Well, this one in
Virginia, it passed. Yeah. It

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passed both chambers of the
legislature. And it now just

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needed the governor's signature,
which will definitely happen

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because it was passed
unanimously. As Johny mentioned,

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there was no opposition to the
bill. But what we should really

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say is that there was no
opposition to this draft, the

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last draft of the bill, of
course, there was opposition to

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the original version of the
bill. But the one that passed,

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there was no opposition on the
political, the political aisle.

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So when we're talking about the
Republicans and the Democrats,

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they passed the last version of
the bill unanimously. There was,

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of course, some pushback from
the industry itself. And I think

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that they they probably helped
inform. Yeah. You know, some of

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some of the changes that were
made. In fact, I think that

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delegate Kathy Tran, who was the
bill's sponsor, even said that

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she was thankful that they had
given some input in explaining

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how these products work, and
that they had gone back and did,

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you know had reworded a few
things here and there.

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Johny Fernandez: Yeah. And
something from the first time we

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talked about this back in
January, with Delegate Chan is

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that specifically when she
presented this, she, you know,

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number one said that the reason
she was doing this is because

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she was receiving a lot of calls
from small, specifically

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immigrant business owners, and
that they signed up for an MCA.

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And they did not know what
exactly was going on. They

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didn't know what they signed up
for. And now there was a

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confusion of like, how they were
supposed to pay it back, or how

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much they were supposed to pay
back. And there was this big

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question mark from the small
business owners that they

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essentially did not know what
they signed up for.

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Sean Murray: Supposedly
supposedly and allegedly.

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Johny Fernandez: And allegedly,
and that was something that she

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had presented. And she also said
back in January, at that time,

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that they had to really figure
out and understand what an MCA

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was. Right. Because they did not
know. And it wasn't, you know,

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they were very careful with how
they presented the language of

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an MCA or alternative finance.
So one thing that she did say

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is, you know, they're high
interest rates. But she wanted

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to learn more, like you said,
about, you know, what exactly

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was the MCA and the.

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Yeah, I think something that she
had mentioned last time was that

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Sean Murray: Because there are
no interest rates at MCA. So

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it's like, right off the bat,
you know what I mean? She kind

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of came in with an impression as
to how certain things worked.

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And then it looks like she did,
she did take input. Yeah. That

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wasn't just her obviously, this
was passed unanimously. So that

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there were, you know, many, many
members of the legislature who

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were taking feedback from what
we can see. And the final

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version of the bill passed, and
so okay, a bill passed, you

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know, great. Sean, Johny, what
does that mean for me? I'm a

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broker, a funder, a lender. I'm
working in an office, the bill

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passed, you know, what is this
all gonna mean? And what's in

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it? So I'm not gonna, I'm not
gonna read the entire entire

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version of it. But essentially,
what it covers is that there

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will be just there will be
disclosures that you have to put

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on a on a contract when it
involves a Virginia merchant.

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the goal was to have it in
regular language so that a

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business owner would fully
understand, like if they're an

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immigrant business, so that was
something that she had presented

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back in January, that was one of
the goals that she had.

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Yeah, you know, having read
through it myself, I don't know

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if the disclosure that is being
required really changes,

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anything per se, I think that
the disclosure that was being

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provided by many companies, was
already pretty straightforward.

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Essentially, every company that
I've seen, will tell you how

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much you're going to get, how
much it is going to cost you and

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the terms of payment. And that
is usually pretty clear. This

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particular bill will have it,
you know, presented in some sort

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of uniform way. And one thing I
will note and I don't maybe

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perhaps I don't have the final
version of the bill in front of

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me, but I did print out the
latest version that I could

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find, and I did not see an
annual percentage rate

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requirement. In this particular
bill, like you saw in the state

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of New York and in the state of
California. What was tricky

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about similar bills in other
states is that they were so

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focused on annual percentage
rates on sales based financing

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transactions, and of course, the
pushback was, there is no APR on

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an agreement for which there is
no time, mot that they don't

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want to tell people what the APR
is, or it doesn't apply, because

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it's short term, you know, why
are we even talking about this?

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No, it's because it
mathematically, it cannot be

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calculated. APR is a very
precise number, at least in the

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latest draft of the bill that I
have, I did not see an annual

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percentage rate in there someone
else can, I'm sure, correct me

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if I'm mistaken, but I did not
see it in the draft. And so that

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would probably be one area of
relief, at least to the sales

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based financing providers as
they are so called, which, of

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course, they were targeting
merchant cash advance,

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specifically. So that's, that's
one thing, there's a set of

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disclosures for Virginia based
merchants that you'll have to

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comply with, but it doesn't look
like APR is one of them. Another

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one is that you're gonna have to
register with the state of

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Virginia to essentially offer
this product in Virginia. So

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that is kind of what I think is
going to be a cost burden to

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companies out there. Because if
we're looking at all these

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different states having
different rules, and you got to

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be registered with each of the
states in order to do business

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in the state, that's an extra
added cost. And I'm sure there's

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all types of compliance things
that are going to come with that

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too.

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Johny Fernandez: So I have a
question. You may not know the

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answer to this, or you may. So
if we're in New York, and

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there's a merchant, or a
business owner in Virginia, and

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they need our help, the New York
company has registered in the

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state of Virginia and followed
these rules, even though they

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are not based in Virginia, and
they're just doing business in

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Virginia.

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Sean Murray: If they want to do
they want to do a deal with a

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Virginia based merchant?

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Johny Fernandez: Yeah.

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Sean Murray: That's my non
attorney impression.

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Sean Murray: Right, that this
was to protect, or help and aid

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Johny Fernandez: Okay.

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Virginia based businesses. And I
doubt that a funding company

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based in another state can say,
well, we're not based in

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Virginia, they were exempt from
all this, you know, all these

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rules and regulations. I'm not a
lawyer, so I can be completely

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wrong again. But I really think
it's for businesses, and

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merchants that are based in
Virginia, not where the funding

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company itself is based. So you
will have to register there,

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from what I can see. And then
the other thing is that, and

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again, I don't know if this was
in the final version of the

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bill. But at least in the one I
have, it talks about how if you

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have a dispute. Okay. With that
Virginia based merchant, that

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Johny Fernandez: Yeah. So
thanks.

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you have to bring your claims,
like, if you're going to file a

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lawsuit, you have to bring your
claims in a Virginia court, that

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you can't sue them in New York,
or sue them in California, sue

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them in Florida and be like,
haha, you know, like, this is

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our jurisdiction, and you're
gonna have to hire a lawyer,

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many states away, etc. Or I
don't I don't know if that's how

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really how people look at it, at
least in a version of the bill

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that I have in my hands, it did
talk about how you need to

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bring, you need to bring your,
your claims into the

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Commonwealth, and rectify the
dispute there. So that could be

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an added legal burden. Because
if you're depending on local

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counsel, like if you're in
Florida, or New York, or

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California and you, you've got
this lawyer locally, who does

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all your work for you, and you
fire all your lawsuits locally,

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it could be an added burden for
you to have to hire counsel in

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Virginia, and potentially
navigate the legal system in

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Virginia, especially for the for
the small companies out there.

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So those are kind of those are
kind of the major things there.

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The other one is, basically,
make sure that making sure that

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your your marketing is truthful,
there's a little section about

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how you can't miss or
misrepresent or mislead. And if

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you do that, the state of
Virginia has the ability to kind

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of take some type of action
against you. So that should be

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you know, I didn't read through
the fine print of that one. But

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that should be something that
everyone thinks about anyway, in

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every state, because you can
already feel the wrath of the

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Federal Trade Commission if you
mislead people on the federal

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level. And so perhaps this is
just like another state level

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reminder, to be on the up and up
when it comes to your marketing

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and your your sales and
everything you say. And you do.

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Sean Murray: That's Virginia.

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Johny Fernandez: That's
Virginia.

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Sean Murray: So the governor
still needs still needs. You

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want to get your cards?

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Johny Fernandez: Yeah.

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Sean Murray: Might as well do it
now.

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Johny Fernandez: Sorry, I
dropped my cards, ladies and

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gentlemen.

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Sean Murray: So Virginia still
needs to have the governor sign

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it. That will of course happen
given that it was unanimously

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passed by the state legislature,
implementation of the law from

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what I remember, it's supposed
to go into effect on July 1

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2022. However, however, in New
York and California where they

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pass their own disclosure laws,
we've seen delays happen because

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of how complicated it can be.
Yeah. California passed its

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disclosure law in 2018. It still
has not gone into effect. Yeah.

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New York, New York was supposed
to enact their disclosure law

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January 1 of this year, and on
literally on December 31. They

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they issued a statement saying
we're not ready. You know what I

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mean? Like we need more info and
they actually wanted to go back

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to the drawing board and rewrite
their proposed regulations, get

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feedback on it, and then
implement it later. They said,

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that's not going to happen.
They're not even going to have

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that that draft proposal until
the end of this month. Maybe

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it's already out. I haven't
checked in like three or four

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days. But New York has taken
quite a bit of time to implement

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it. California has taken
enormous, an enormous amount of

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time, four years. So Virginia
says July 1 2022, as someone who

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has not spoken to anyone about
it, it has I have no insider

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knowledge as to what will
happen. I will just say that

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based on experience, these
particular deadlines have gotten

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extended, at least in other
states, so perhaps this will be

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the case in Virginia as well.
Just might just a guess.

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Johny Fernandez: Yeah. No,
that's good. Well, thank you for

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your knowledge. I know you're
not a lawyer, but I mean, we've

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been following very similar
stories around the country with

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similar situations going on. So
be interesting to see what

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happened

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Sean Murray: And that was the
third state that has passed a

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law like that they've all been a
little bit different.