1
00:00:00,000 --> 00:00:02,250
Speaker 1: You have seen the
last the next bill before, thank

2
00:00:02,250 --> 00:00:04,650
you for the previous
conversation House Bill 1027 is

3
00:00:04,650 --> 00:00:08,220
before you. Now. And I do have a
substitute.

4
00:00:09,180 --> 00:00:12,780
Speaker 2: Okay. Is there an
option? Is there a motion to

5
00:00:12,780 --> 00:00:17,250
adopt the substitute? Is there a
motion to adopt the substitute

6
00:00:18,560 --> 00:00:19,550
Speaker 1: Committee members?

7
00:00:19,550 --> 00:00:23,110
Speaker 2: There's a motion to
adopt the substitute. Is there a

8
00:00:23,110 --> 00:00:31,150
second? Second.All right.
There's motion. Second. All

9
00:00:31,150 --> 00:00:34,840
those in favor say aye. Aye. All
right, Delegate Tran.

10
00:00:35,140 --> 00:00:37,990
Delegate Tran: Thank you, House
Bill 1027. We saw last week. And

11
00:00:37,990 --> 00:00:41,020
I want to remind folks, it was
really appreciative of how it

12
00:00:41,020 --> 00:00:44,350
came out of this body
unanimously. So really

13
00:00:44,350 --> 00:00:48,670
appreciate the bipartisan
support. We had to take a couple

14
00:00:48,670 --> 00:00:53,440
of days because the SEC reviewed
the bill last time, we

15
00:00:53,440 --> 00:00:56,140
identified some areas that
needed to be updated to address

16
00:00:56,140 --> 00:01:00,730
some fiscal concerns. And in
that meantime, you'll recall

17
00:01:00,730 --> 00:01:03,220
there were no there are no no
witnesses and opposition. But in

18
00:01:03,220 --> 00:01:08,950
the meantime, the industry got
itself organized and came to us

19
00:01:08,980 --> 00:01:12,910
late on Tuesday night with some
proposals, this substitute

20
00:01:12,940 --> 00:01:16,510
attempts to address those
proposals. I think at the end of

21
00:01:16,510 --> 00:01:21,670
the day, we all agreed that the
merchant cash advance, as a

22
00:01:21,670 --> 00:01:27,130
lending or financial practice
can be predatory. And we heard

23
00:01:27,130 --> 00:01:31,330
testimony from the Richmond
black restaurant experience

24
00:01:31,330 --> 00:01:37,600
members who have had a merchant
cash advance who and who, you

25
00:01:37,600 --> 00:01:40,360
know, are now really in a deep
hole, because they didn't fully

26
00:01:40,360 --> 00:01:43,510
understand the parameters of the
agreement in the beginning, what

27
00:01:43,510 --> 00:01:47,680
I've shared with you are two
examples of a merchant cash

28
00:01:47,710 --> 00:01:54,490
advance agreement. They're from
the same business. Because she

29
00:01:54,490 --> 00:02:00,490
had to borrow more money to pay
for the first the first

30
00:02:01,240 --> 00:02:05,560
agreement, it's not alone. So
the first agreement. As you can

31
00:02:05,560 --> 00:02:08,770
tell, looking, just looking at
the two documents, doesn't give

32
00:02:08,770 --> 00:02:12,250
you a whole lot of information.
I'm sorry, I know it's late, but

33
00:02:12,520 --> 00:02:13,750
I have a lot of strong feelings.

34
00:02:14,050 --> 00:02:16,270
Speaker 2: Is that is the
substitute?

35
00:02:16,300 --> 00:02:19,630
Delegate Tran: So what this
substitute does is it adds for

36
00:02:19,630 --> 00:02:24,940
you that, you know, a date and
time for when some of the fees

37
00:02:24,940 --> 00:02:30,370
have to be submitted, that was
for the SEC, so by line 47 on my

38
00:02:30,370 --> 00:02:35,560
draft, but by September 15,
every year, it also industry

39
00:02:35,560 --> 00:02:39,370
recommended adding brokers,
third party entities that sell

40
00:02:39,370 --> 00:02:43,330
these offer these opportunities
as well to be regulated. And we

41
00:02:43,330 --> 00:02:47,110
took that we took that
recommendation, industry also

42
00:02:47,110 --> 00:02:51,520
recommended that we banned the
use of confessions of judgment,

43
00:02:52,060 --> 00:02:54,010
which I thought was really
helpful. And we also took that

44
00:02:54,010 --> 00:03:00,040
recommendation, the two that we
then then industry also asked

45
00:03:00,070 --> 00:03:03,790
indicated they can't calculate
the APR, the way we've laid it

46
00:03:03,790 --> 00:03:07,090
out in the bill, although the
only other state that has this

47
00:03:07,090 --> 00:03:10,480
implemented, just reinforce
their APR requirements. We've

48
00:03:10,480 --> 00:03:14,020
also eliminated that from the
bill. The third, the fourth

49
00:03:14,020 --> 00:03:17,440
piece that we don't have
agreement on is industry and

50
00:03:17,440 --> 00:03:20,980
recomm requested that the
jurisdiction for arbitration or

51
00:03:20,980 --> 00:03:25,660
cause of action not be limited
to the location of the business.

52
00:03:27,370 --> 00:03:30,370
And I have not agreed to that. I
do not think that Virginia,

53
00:03:30,400 --> 00:03:32,830
small businesses should be
traveling all around the country

54
00:03:33,040 --> 00:03:35,620
to try to resolve any issues.
They have agreements.

55
00:03:35,890 --> 00:03:40,480
Speaker 2: Is it just in that
regard? Is it? Is the language

56
00:03:40,480 --> 00:03:44,560
just that it has to occur in the
Commonwealth? Or does it

57
00:03:44,560 --> 00:03:47,380
actually have to occur in like,
if I've got a business that

58
00:03:47,380 --> 00:03:49,390
Alexandria, I've got to do it
and Alexandria.

59
00:03:49,420 --> 00:03:51,910
Speaker 1: I left it as
originally, which is you would

60
00:03:51,910 --> 00:03:55,330
have to do it in Alexandria.
Okay. That's where I left it

61
00:03:55,330 --> 00:03:57,940
originally. I think we are still
tinkering on some of the

62
00:03:57,940 --> 00:04:00,970
language in terms of the
disclosure, what the disclosure

63
00:04:00,970 --> 00:04:04,360
notices would have to be. But I
hope that if we can continue to

64
00:04:04,360 --> 00:04:07,270
move this bill forward, that we
could fine tune that language. I

65
00:04:07,270 --> 00:04:08,290
think that's really important.

66
00:04:08,590 --> 00:04:10,480
Speaker 2: All right. Now it's
time to take a little bit of

67
00:04:10,480 --> 00:04:12,910
testimony, I believe. Thank you
for walking us through the

68
00:04:12,910 --> 00:04:15,880
changes that have occurred,
since we already kind of went

69
00:04:15,880 --> 00:04:19,390
over the overhaul. Is there
anybody that would like to speak

70
00:04:19,420 --> 00:04:22,960
for or against or share their
concerns?

71
00:04:34,780 --> 00:04:37,180
Unknown: Mr. Chair, members of
the subcommittee Nicole Brenner

72
00:04:37,180 --> 00:04:39,760
with Reed Smith on behalf of the
Small Business Finance

73
00:04:39,760 --> 00:04:43,750
Association and the retail based
finance coalition, both of whom

74
00:04:43,750 --> 00:04:46,150
are nationwide trade
associations of finance

75
00:04:46,150 --> 00:04:49,180
companies offering a portfolio
of financing products to small

76
00:04:49,180 --> 00:04:52,900
businesses. I want to start out
by thanking the patron. She is

77
00:04:52,900 --> 00:04:57,310
right we have taken the week to
get organized and she has been

78
00:04:57,340 --> 00:05:00,940
gracious with her time and
consideration of Our issues over

79
00:05:00,940 --> 00:05:05,140
the last week and we appreciate
the conversations. I have not

80
00:05:05,140 --> 00:05:09,610
reviewed the substitute but she
is correct in characterizing our

81
00:05:09,610 --> 00:05:16,660
concerns. And while I understand
there are some lending statutes

82
00:05:16,840 --> 00:05:22,600
that do speak to venue, Delegate
Bagby patron one two years ago,

83
00:05:22,600 --> 00:05:26,920
I'm sure he remembers that
lenders cannot bring an action

84
00:05:27,100 --> 00:05:29,560
against a merchant outside of
the Commonwealth. That's very

85
00:05:29,560 --> 00:05:33,550
different than the arbitration
and invalidation of contract

86
00:05:33,550 --> 00:05:36,400
provisions that are in the bill
from last week. So we would

87
00:05:36,400 --> 00:05:39,130
appreciate the committee's
consideration of continuing that

88
00:05:39,130 --> 00:05:41,530
conversation. And I hope that
patron will continue to work

89
00:05:41,530 --> 00:05:45,790
with us on that in the next few
days. As to disclosure of the

90
00:05:45,790 --> 00:05:49,510
APR. I'll also say we have a
number of our member companies

91
00:05:49,510 --> 00:05:53,320
online, and we have asked them
to not be online to testify

92
00:05:53,320 --> 00:05:57,160
anymore out of deference to the
committee's time. But as to APR,

93
00:05:57,160 --> 00:06:01,480
I do want to defer to an
industry expert, Jesse Carlson

94
00:06:01,510 --> 00:06:04,630
from one of our member companies
is with me, and I think he can

95
00:06:04,630 --> 00:06:06,820
explain that issue a little
better than I can

96
00:06:07,090 --> 00:06:09,430
Speaker 2: Alright ,thank you.
So if you could.

97
00:06:11,080 --> 00:06:13,720
Speaker 4: Good evening,
committee members, I'll be

98
00:06:13,720 --> 00:06:15,820
reading my comments. My name is
Jesse Carlson and the general

99
00:06:15,820 --> 00:06:18,610
counsel of capitas. We are a
leading provider of small

100
00:06:18,610 --> 00:06:22,240
business financing a variety of
products. We have offices in New

101
00:06:22,240 --> 00:06:24,190
York and in Arlington, Virginia
and have been in the

102
00:06:24,190 --> 00:06:28,780
Commonwealth for more than a
decade. As I have not reviewed

103
00:06:28,810 --> 00:06:33,490
the language as I understood it,
we have we have worked very

104
00:06:33,490 --> 00:06:35,530
successfully with Delegate Tran,
who is very knowledgeable on

105
00:06:35,530 --> 00:06:38,800
these issues. We believe that
based on my understanding of the

106
00:06:38,800 --> 00:06:42,280
changes to the bill, the only
issue that we would have to

107
00:06:42,280 --> 00:06:44,920
continue to work with her on is
the venue selection provision

108
00:06:44,920 --> 00:06:47,740
assuming that APR has been
removed, I believe that she's

109
00:06:47,740 --> 00:06:50,590
strengthened the bill and we
share her goals of protecting

110
00:06:50,590 --> 00:06:56,170
small businesses and giving them
transparency and protecting them

111
00:06:56,170 --> 00:06:59,470
from potential bad actors in the
industry. If he has any

112
00:06:59,470 --> 00:07:00,700
questions, I'd be happy to
answer them.

113
00:07:00,760 --> 00:07:03,970
Speaker 2: So it sounds like we
only have one little bit to do.

114
00:07:04,060 --> 00:07:05,410
Do we think we can get there?

115
00:07:05,920 --> 00:07:06,940
Speaker 4: I believe so.

116
00:07:07,660 --> 00:07:09,010
Speaker 2: Delegate. Do you have
a question?

117
00:07:09,030 --> 00:07:15,270
Unknown: Yes. I have a question
for the patron. Yes, sir. Allah

118
00:07:15,270 --> 00:07:19,620
has been saved. But now that the
rabbit the rabbit has the gun.

119
00:07:20,580 --> 00:07:23,460
Tell me exactly does this bill
do much of anything?

120
00:07:25,170 --> 00:07:27,980
Speaker 1: I have a lot of
feelings delegate. But I would

121
00:07:28,041 --> 00:07:31,646
answer that by saying this. I'm
gonna answer that by saying

122
00:07:31,707 --> 00:07:35,128
this. This particular product on
the market right now is

123
00:07:35,189 --> 00:07:38,977
completely unregulated at the
federal level, and frankly, only

124
00:07:39,038 --> 00:07:42,459
really regulated in one other
state. This puts us at the

125
00:07:42,520 --> 00:07:46,125
cutting edge of wrapping our
arms around the information of

126
00:07:46,186 --> 00:07:49,974
what's happening in Virginia and
making sure at the very least

127
00:07:50,035 --> 00:07:53,456
when Virginia small businesses,
particularly main street

128
00:07:53,518 --> 00:07:57,122
businesses that don't have
access to traditional financing,

129
00:07:57,183 --> 00:08:00,788
cap, you know, opportunities
that they get the full picture

130
00:08:00,849 --> 00:08:04,270
of the agreement they're
entering into, and I think that

131
00:08:04,331 --> 00:08:07,020
in and of itself is a positive
step forward.

132
00:08:07,020 --> 00:08:13,330
Unknown: All right, thanks. Doug
Bagby. Motion report. There's

133
00:08:13,449 --> 00:08:20,354
been a motion report is there as
or with a substitute, but

134
00:08:20,473 --> 00:08:27,379
there's been a motion report
with a substitute. Is there a

135
00:08:27,498 --> 00:08:34,760
second? There's been a motion to
report with a substitute and

136
00:08:34,880 --> 00:08:41,428
properly seconded. Will the
clerk please open the roll?

137
00:08:41,547 --> 00:08:48,571
Corker Clozaril. Committee
recommends reporting nine to one

138
00:08:48,691 --> 00:08:52,620
with an effort for this last bit.

139
00:08:52,920 --> 00:08:55,600
Speaker 1: Great. Thank you so
much members of the committee.

140
00:08:55,653 --> 00:08:56,190
Thank you.

141
00:08:56,190 --> 00:08:56,610
Speaker 2: All right