Here we have for what appears to be the first time ever
a state actually implementing its disclosure
law that it passed. We've had several States Implement of
past laws and not Implement them. Virginia is
going to be the first as of at least
as of Friday.
It was still on to go into effect on
July 1st. Now. It's possible. It could
be delayed. Yeah for like a month or so. Yeah only because
the law requires that some
very specific form disclosure form
be used in this form was given out to
a lot of the companies that will be impacted and I think
there was some worry that
they would not be able to incorporate it into their technology Quicken up.
But okay great. Here's this form. What do
you mean? I have to implement it by what if July first is what Friday Friday we mean
to implement it by Friday. Yeah. You got to give me you just
got to give me maybe even just a couple more months like
You know, we'll do it. Right we know we have to comply
just give me a little bit more time. And so there is
a disclosure form that's been drafted that is available
on our site that you can see.
And it's a it's it's very basic. How much
is the merchant gonna get funded? You know, what is the cost? What are
all the fees broken down? These type of things can
can already usually be found on a small business finance
contract. I think one of the new and
unique pieces of it is that
it does require the funding company to put the amount
of commission or compensation that the broker
is getting. Yeah. So normally the merchant would
not know what the
broker was getting could be
thousands of dollars. Yeah could be 100 dollars, but I
don't know that the merchants usually new now.
It's going to be spelled out on an actual form right
in a very specific area that don't they'll
know where to look and so I don't know if that
will change the negotiation process between
the merchant and the broker I actually posted a post a
question on LinkedIn asking people what they
thought will happen and there is some belief that
Change the negotiating conversation that let's
say a broker stands to makes a significant chunk
of change right that the
there could be some pushback from the merchant to say,
why are you making so much? You know what I mean?
Like, what can we do to get my own cost down where you're
not getting this what I perceive to be an exorbitant amount
of money. It might not even be exorbitant. It might be low, right? But no,
how can how does how can I change my
own cost now when I see what you're making? Oh, you're
gonna make $8,000 on this. Well, why don't
you go back to the underwriters and tell them I want a much better deal. Yeah, since
you're making all this money go work harder for me get me
something better, right? You can't just give me
two phone calls and shoot me an email and get eight grand out of
it. Yeah, go to work for me do the work.
Now, I don't know that the merchants are
going to realize that oftentimes this sales person.
They're working with isn't getting that amount. They're usually
getting a percentage of that amount because it's the broker's shop.
That's getting the total dollar amount. But in
any case, you know, what's different about the contract is going
to be that disclosure. That's probably going to change the
conversation. And then what was it? What was the second thing
that you asked so how I was going to impact businesses in
okay. Yeah doing businesses with MCAS. Okay, or
it's not just MCA. That's all types of small business
financing. And so the other aspect of how
will it change is that by November if you
want to offer small business financing?
To a virginia-based business
you have to register with the state of Virginia. You
have to abide by a certain set of rules. You have
to submit yourself to a background check and pay a fee. If
you're any type of criminal or whatever. They're looking
at the officers the owners the managers the directors whoever
effectively control the organization if you're basically a
criminal you're not going to be allowed to do that type of
business in Virginia. Also, if you have a
dispute over the contract, it does require you
to bring your case in the state of Virginia. You
would not be this now. This is my non lawyer
hat. So please consult the way over everything but
My Elementary reading of it. It's kind
of states that you'd have to bring your claims in
a Virginia court that you couldn't sue them in
the near in New York state. Yeah also, you
could be subject to audits penalties and
fines by the Virginia state regulator. You have to
pay an annual fee. You're essentially have to be licensed. Yeah. And so
you cannot just do business freely and
not think you're care about anything. There's now going
to be a watchdog essentially regulator. Yeah who oversees you
in that state? Yeah, that's that goes into
effect. My understanding is November the having to be licensed part
but the commission disclosure and the rest of the disclosure. It's supposed to
go into effect July first. So do you think that other states will also
take no of what's going on in Virginia
and how they're doing things and implement it into what
they want.
I mean, I don't know that they don't necessarily follow what
Virginia is doing. I think Virginia followed other states. Yeah,
California Pastor law four years ago, and it
finally goes into effect in December.
New York passed its law is not yet got into effect. Yeah,
and we're still waiting for a a updated
and updated.
Guidance or draft? I'm not really sure what it is.
What what you would call it. But um, there was
a proposal as to how the law would be carried out by the
New York State regulator and they put out something and
people said it's not going to work someone back to the drawing board and we had
haven't heard from them since Utah also passes own
law that's going to go into effect as well.
I don't think people are gonna look to Virginia necessarily for how you
know, what can they do in their own state? But I think that they may
look at it for how how quick
was the industry able to adapt
to providing the disclosures because
if you say it's impossible to give you to comply it's
such a short amount of time. We'll have to update
all our technology and everyone does it and one day. Yeah,
and then you tell California it's gonna take me years to do
it. Yeah, like