1 00:00:04.300 --> 00:00:07.200 Hello, welcome back to d-bang TV. I'm Sean Murray and I'm 2 00:00:07.200 --> 00:00:10.200 Johnny Fernandez. Thank you guys so much for joining us today. Today. We're gonna have 3 00:00:10.200 --> 00:00:14.100 a very interesting conversation about a 4 00:00:13.100 --> 00:00:17.200 law that's gonna be put into effect tomorrow in 5 00:00:16.200 --> 00:00:19.000 Virginia. We briefly spoke about 6 00:00:19.200 --> 00:00:23.100 it yesterday, but Sean we're gonna actually go through the disclosure 7 00:00:22.100 --> 00:00:25.800 form that is going to be needed starting tomorrow 8 00:00:25.800 --> 00:00:28.300 if you're doing business in Virginia. Yeah. I mean, we don't usually do 9 00:00:28.300 --> 00:00:30.900 we don't usually you can go get that. Yeah. 10 00:00:32.100 --> 00:00:36.000 We don't usually do a live stream on Thursday, but it 11 00:00:35.200 --> 00:00:38.500 is a very special day as Johnny mentioned and 12 00:00:38.500 --> 00:00:41.600 that is because a law goes into effect tomorrow 13 00:00:41.600 --> 00:00:44.100 in the state of Virginia. If you've ever funded a 14 00:00:44.100 --> 00:00:47.000 business in Virginia, if you plan to fund a business 15 00:00:47.400 --> 00:00:50.100 in Virginia, there's a new law that you have to comply with 16 00:00:50.100 --> 00:00:53.500 effective tomorrow a disclosure form a 17 00:00:53.500 --> 00:00:56.800 set of disclosures that you must provide to the 18 00:00:56.800 --> 00:00:59.300 merchant by law. This is a 19 00:00:59.300 --> 00:01:02.200 Monumental event. Not that the individual things you 20 00:01:02.200 --> 00:01:05.100 have to disclose or necessarily Monumental, but it's the first 21 00:01:05.100 --> 00:01:08.800 time we've had a state Implement. It's disclosure 22 00:01:08.800 --> 00:01:11.700 law Johnny and I have been talking about disclosure 23 00:01:11.700 --> 00:01:14.400 laws for years now and none of them have ever gone 24 00:01:14.400 --> 00:01:17.600 into effect ever except finally tomorrow 25 00:01:17.600 --> 00:01:20.600 one state is finally implementing its 26 00:01:20.600 --> 00:01:23.300 law and we want to talk all about it because you may 27 00:01:23.300 --> 00:01:26.300 be thinking, you know, it's all smoke and mirrors, but it's actually 28 00:01:26.300 --> 00:01:28.200 happening for real. We're as tomorrow. 29 00:01:28.900 --> 00:01:31.600 In Virginia, you have to provide a set 30 00:01:31.600 --> 00:01:34.700 of disclosures to merchants in Virginia. And what's 31 00:01:34.700 --> 00:01:37.600 interesting. Is that even if you're located in 32 00:01:37.600 --> 00:01:40.300 New York and you are doing some type 33 00:01:40.300 --> 00:01:43.400 of transaction in Virginia, you have 34 00:01:43.400 --> 00:01:47.000 to follow these rules. Yep. It's it applies to any situation 35 00:01:46.300 --> 00:01:49.500 in which you are funding a virginia-based business. 36 00:01:49.500 --> 00:01:52.800 So if you're like, I'm not in Virginia, who cares. Well, you 37 00:01:52.800 --> 00:01:55.300 should care because it's going to apply to you if you 38 00:01:55.300 --> 00:01:58.600 ever Finance or fun a business located in 39 00:01:58.600 --> 00:02:01.800 Virginia. There are now a new set of disclosures that 40 00:02:01.800 --> 00:02:04.100 have to be given two ways small business 41 00:02:04.100 --> 00:02:07.300 before the transaction is consummated. So 42 00:02:07.300 --> 00:02:10.400 Sean, let me ask you this for those people that are saying, you know, 43 00:02:10.400 --> 00:02:13.200 oh that I'm just gonna exclude Virginia 44 00:02:13.200 --> 00:02:16.300 from my business book. I'm not gonna do 45 00:02:16.300 --> 00:02:18.900 any business in Virginia at all. What would you say to them? 46 00:02:20.300 --> 00:02:23.200 So this is already come up a bit. You know, I've kind of 47 00:02:23.200 --> 00:02:26.300 I've kind of put out some notices about the 48 00:02:26.300 --> 00:02:29.600 law on social media and on our website and there 49 00:02:29.600 --> 00:02:32.600 there is some kind of sentiment that 50 00:02:32.600 --> 00:02:35.200 you could just exclude Virginia because this is 51 00:02:35.200 --> 00:02:38.200 gonna make it too difficult to continue doing business 52 00:02:38.200 --> 00:02:41.700 there. But the the challenge with that is other states 53 00:02:41.700 --> 00:02:44.300 have already passed similar if not more 54 00:02:44.300 --> 00:02:47.200 challenging laws. And so if you're already writing up 55 00:02:47.200 --> 00:02:50.000 Virginia because you think that one's too hard or then the law in New York 56 00:02:50.200 --> 00:02:53.600 and California that already passed or even harder. Are you 57 00:02:53.600 --> 00:02:56.200 prepared to write up other states too? Yeah. So 58 00:02:56.200 --> 00:02:59.600 if you're like, I'm just not gonna work with Virginia based businesses. You might 59 00:02:59.600 --> 00:03:02.300 also be saying that you're not going to work with New 60 00:03:02.300 --> 00:03:05.400 York and California based businesses, and that would be a huge chunk 61 00:03:05.400 --> 00:03:08.200 of the population to Forfeit. I think so. 62 00:03:09.200 --> 00:03:12.400 If you intend to continue doing business in 63 00:03:12.400 --> 00:03:15.200 the United States of America, hopefully they're the 64 00:03:15.200 --> 00:03:18.800 way that you can comply with this Virginia law. Yeah, 65 00:03:18.800 --> 00:03:21.500 so let's get to it. Let's let's 66 00:03:21.500 --> 00:03:24.100 review this disclosure form. Yeah, we're gonna go through the 67 00:03:24.100 --> 00:03:27.500 form. So Johnny and I are both holding a copy of this of the 68 00:03:27.500 --> 00:03:31.200 same form. You probably can't see it on the camera. That's okay. There is 69 00:03:30.200 --> 00:03:33.300 a copy there's a link 70 00:03:33.300 --> 00:03:36.200 to it on our website. If you just kind of scroll down in the home page, 71 00:03:36.200 --> 00:03:39.800 you'll see a story about Virginia and they're 72 00:03:39.800 --> 00:03:42.600 the link there that goes to a disclosure form this 73 00:03:42.600 --> 00:03:45.200 disclosure form. It's only two pages. It was 74 00:03:45.200 --> 00:03:48.500 created by the state the state wanted everyone to 75 00:03:48.500 --> 00:03:51.300 use this very specific form and there was 76 00:03:51.300 --> 00:03:54.500 some pushback over to how it's kind of yeah, you 77 00:03:54.500 --> 00:03:57.000 know created whether or not it will it will work 78 00:03:57.200 --> 00:04:01.200 for contracts that are automated because some people use technology to 79 00:04:00.200 --> 00:04:03.800 create an automated contract like they do 80 00:04:03.800 --> 00:04:06.700 a docu sign. Yeah, right or assign now 81 00:04:06.700 --> 00:04:08.700 or something. Yeah, and this has to be 82 00:04:09.200 --> 00:04:12.700 Pretty much implemented into their their existing technology and 83 00:04:12.700 --> 00:04:15.100 there was some pushback over how the form should look 84 00:04:15.100 --> 00:04:18.400 and I think the state is kind of said, okay, we understand what 85 00:04:18.400 --> 00:04:21.100 you're saying. You still have to disclose all of these 86 00:04:21.100 --> 00:04:24.600 things. This might not be the exact final form 87 00:04:24.600 --> 00:04:27.000 the way it looks. Yeah, but you're still gonna 88 00:04:27.200 --> 00:04:30.200 have to disclose what the law says you have to disclose. So yeah, we're just 89 00:04:30.200 --> 00:04:33.300 gonna kind of do a walk through and we can even you know, 90 00:04:33.300 --> 00:04:36.600 if you have some kind of a questions about 91 00:04:36.600 --> 00:04:39.500 certain parts of it, you can feel free to ask me Johnny and 92 00:04:39.500 --> 00:04:42.300 I were kind of going back and forth about it before we went on 93 00:04:42.300 --> 00:04:45.000 and I I think that a lot 94 00:04:45.200 --> 00:04:48.000 of people out there are going to have questions about and of course, 95 00:04:48.300 --> 00:04:52.100 we're not lawyers and you are going to need some type of counsel to 96 00:04:51.100 --> 00:04:54.300 guide you through it, especially if you're a funder 97 00:04:54.300 --> 00:04:55.900 if you're if you're a broker, 98 00:04:56.600 --> 00:04:59.200 This kind of compliance isn't as 99 00:04:59.200 --> 00:05:02.300 difficult because it's really more for the funder to provide 100 00:05:02.300 --> 00:05:05.300 to the merchant for the broker. The number 101 00:05:05.300 --> 00:05:08.300 one thing that impacts you is that the amount 102 00:05:08.300 --> 00:05:11.100 of commission you're being paid on a deal is going to 103 00:05:11.100 --> 00:05:14.500 be revealed in the full to the merchant. That's 104 00:05:14.500 --> 00:05:17.200 how you are going to be affected. The amount that you're getting 105 00:05:17.200 --> 00:05:21.100 paid is going to be put into the contract and 106 00:05:20.100 --> 00:05:23.200 the merchant is going to see it. You're not gonna be able to hide 107 00:05:23.200 --> 00:05:26.400 it on page, you know, 47 or whatever in the 108 00:05:26.400 --> 00:05:30.100 fine print. It's gonna be part of an official disclosure form that 109 00:05:29.100 --> 00:05:30.200 says 110 00:05:31.100 --> 00:05:34.600 Is the provider paying compensation directly to a broker? Yes 111 00:05:34.600 --> 00:05:37.300 or no? If the answer is yes, the amount 112 00:05:37.300 --> 00:05:40.500 of compensation being paid directly to the broker. So 113 00:05:40.500 --> 00:05:43.800 this could change the dynamic up conversations you 114 00:05:43.800 --> 00:05:46.300 have with small business owners because they're 115 00:05:46.300 --> 00:05:49.300 going to know exactly how much they're getting paid. So you might be 116 00:05:49.300 --> 00:05:49.900 thinking of 117 00:05:50.900 --> 00:05:53.000 is the value on providing, you know 118 00:05:53.400 --> 00:05:56.900 doesn't measure up to what they're gonna see I'm getting paid and 119 00:05:56.900 --> 00:05:59.600 it's there's a chance they might say yes or 120 00:05:59.600 --> 00:06:02.300 no, right? Like if your entire interaction with 121 00:06:02.300 --> 00:06:05.600 the merchant is short they might be wondering. 122 00:06:05.600 --> 00:06:08.400 Why are you getting paid so much? Yeah, or there 123 00:06:08.400 --> 00:06:11.300 might be saying this person got me a deal. I never thought possible. 124 00:06:12.400 --> 00:06:15.100 Of course, they're getting paid what they're getting paid. It all makes 125 00:06:15.100 --> 00:06:15.500 sense to me. 126 00:06:18.100 --> 00:06:18.900 I laugh because 127 00:06:20.200 --> 00:06:23.400 There's a very similar form with real estate agents in New 128 00:06:23.400 --> 00:06:27.100 York. And when people see the how 129 00:06:26.100 --> 00:06:30.100 much the compensation is. There's been 130 00:06:29.100 --> 00:06:32.200 tough conversations where they're like, we don't want to pay that. 131 00:06:32.800 --> 00:06:34.800 And is that negotiable? 132 00:06:35.600 --> 00:06:36.000 the commission 133 00:06:36.900 --> 00:06:39.700 Yeah, it is. Okay. It 134 00:06:39.700 --> 00:06:42.200 is a negotiable in real estate to a certain 135 00:06:42.200 --> 00:06:42.500 extent. 136 00:06:43.200 --> 00:06:44.900 And I've seen different. 137 00:06:46.900 --> 00:06:49.400 It's the best way to put it I've seen I see I've 138 00:06:49.400 --> 00:06:52.400 seen different tactics of how 139 00:06:52.400 --> 00:06:55.600 people go about it. So but it's always 140 00:06:55.600 --> 00:06:58.400 an awkward conversation because sometimes they'll see, you know, 141 00:06:58.400 --> 00:07:01.900 you're getting you know years worth of you 142 00:07:01.900 --> 00:07:04.600 are 15% of the annual rate of rent. 143 00:07:05.100 --> 00:07:06.000 And people are like wait. 144 00:07:06.800 --> 00:07:09.700 That's like more than a month's worth of rent. Really? Yeah. 145 00:07:10.600 --> 00:07:13.300 And it always ends up being an awkward conversation if 146 00:07:13.300 --> 00:07:16.400 they don't want to pay or they think that it's too much for the service 147 00:07:16.400 --> 00:07:19.700 that they got because sometimes it's just a one phone call conversation very 148 00:07:19.700 --> 00:07:22.400 similar to this and it's an awkward 149 00:07:22.400 --> 00:07:22.700 conversation. 150 00:07:23.500 --> 00:07:24.500 sometimes 151 00:07:25.200 --> 00:07:28.100 because then you on top of getting the deal 152 00:07:28.100 --> 00:07:29.300 done now you're discussing. 153 00:07:30.400 --> 00:07:33.600 You know compensation and what they believe is 154 00:07:33.600 --> 00:07:36.100 actually, you know, what they deserve, 155 00:07:36.100 --> 00:07:39.800 you know, it's interesting about what you're saying is that 156 00:07:39.800 --> 00:07:42.500 there are really two two elements here. 157 00:07:43.400 --> 00:07:46.600 One is it's the provider paying compensation directly 158 00:07:46.600 --> 00:07:49.300 to the broker, right? That's that's between the 159 00:07:49.300 --> 00:07:52.500 funder and the broker and the merchant is going to know that however, 160 00:07:52.500 --> 00:07:55.200 there are plenty of shouts out there that 161 00:07:55.200 --> 00:07:58.500 charge their own separate fee to the 162 00:07:58.500 --> 00:08:01.100 merchant which is separate from the commission. So they 163 00:08:01.100 --> 00:08:04.100 get a commission from the funding company and then they charge some type 164 00:08:04.100 --> 00:08:06.100 of service fee to the customer. 165 00:08:06.900 --> 00:08:09.600 Now the customer is going to know you're getting paid twice. 166 00:08:09.600 --> 00:08:12.600 You're getting paid a commission from the funding company and 167 00:08:12.600 --> 00:08:15.500 they know that they're paying you directly. Yeah that type 168 00:08:15.500 --> 00:08:15.800 of thing. 169 00:08:16.700 --> 00:08:20.000 Is going to have to be disclosed. That's my understanding based 170 00:08:19.100 --> 00:08:22.300 upon the form that they provided. So 171 00:08:22.300 --> 00:08:25.400 it's it's supposed to detail all of the 172 00:08:25.400 --> 00:08:28.300 fees that are being charged. Yeah, so some people 173 00:08:28.300 --> 00:08:29.200 are getting paid twice. 174 00:08:30.300 --> 00:08:33.200 The lenders paying them a commission and they're saying hey, I'm 175 00:08:33.200 --> 00:08:36.200 not getting paid. So, you know, you have to pay me for my work, 176 00:08:36.200 --> 00:08:40.200 but now they're going to know you're getting paid twice. Yeah, right in 177 00:08:39.200 --> 00:08:42.200 some cases. Obviously not everyone does that 178 00:08:42.200 --> 00:08:45.900 but if if that is a part of your business model what they're 179 00:08:45.900 --> 00:08:47.500 going to find is any legal? 180 00:08:48.300 --> 00:08:51.500 No, it's okay twice. No. No, it's not illegal. Okay. Yeah, but for 181 00:08:51.500 --> 00:08:54.100 some people they like let's say like, 182 00:08:54.100 --> 00:08:57.300 you know a funder is doing that. Some people may see 183 00:08:57.300 --> 00:09:01.300 it as you know sketchy and then I 184 00:09:00.300 --> 00:09:03.300 I've been in a scenario 185 00:09:03.300 --> 00:09:06.300 where that happened and someone called me out and they were 186 00:09:06.300 --> 00:09:06.800 like, that's not 187 00:09:07.700 --> 00:09:10.400 that's okay. Yeah, you're getting paid twice. Yeah, and 188 00:09:10.400 --> 00:09:13.300 they actually like he's that legal. It's like yeah for real estate 189 00:09:13.300 --> 00:09:16.600 agent. It is legal because you're getting paid, you know, either way 190 00:09:16.600 --> 00:09:19.400 you're getting paid but the ethics that 191 00:09:19.400 --> 00:09:22.300 behind it my the morals were 192 00:09:22.300 --> 00:09:22.500 question. 193 00:09:23.900 --> 00:09:27.100 Also question. Yeah, you know so funding companies 194 00:09:26.100 --> 00:09:29.200 also are usually not the biggest 195 00:09:29.200 --> 00:09:32.900 fans of One Brokers charge a separate fee to their 196 00:09:32.900 --> 00:09:35.400 to the customer because it could increase the risk 197 00:09:35.400 --> 00:09:38.300 of the deal that they've just approved. They're like, we're already 198 00:09:38.300 --> 00:09:42.000 paying you, you know, you don't necessarily need to charge another big. 199 00:09:41.400 --> 00:09:44.300 Well, it could risk what though, you're gonna take it. 200 00:09:44.300 --> 00:09:47.800 It could affect the risk profile of the deal because if 201 00:09:47.800 --> 00:09:50.300 they know they they've given you a certain amount and 202 00:09:50.300 --> 00:09:53.300 the cost of this they say that might be the most that this person could really 203 00:09:53.300 --> 00:09:56.900 withstand, right? We don't really want to make it more expensive. Yeah, but 204 00:09:56.900 --> 00:09:59.900 then they find out the broker went in and and all 205 00:09:59.900 --> 00:10:02.100 so towards a separate fee. Now that customer has 206 00:10:02.100 --> 00:10:05.200 gotten less money and what was originally intended it could 207 00:10:05.200 --> 00:10:08.500 change the dynamic of the risk the risk profile and so 208 00:10:08.500 --> 00:10:11.300 not all funders are completely on board with 209 00:10:11.300 --> 00:10:14.100 brokers who charge a separate fee. But in any case 210 00:10:14.100 --> 00:10:17.800 now that we're going to be disclosing everything it could 211 00:10:17.800 --> 00:10:20.000 change the dynamic for sure, you know, 212 00:10:20.200 --> 00:10:22.900 the relationship between the broker 213 00:10:23.300 --> 00:10:26.400 And the customer if the customers is able to see the 214 00:10:26.400 --> 00:10:29.600 exact and precise dollar amount that they're being compensated 215 00:10:29.600 --> 00:10:32.200 in some cases that Merchant might 216 00:10:32.200 --> 00:10:32.200 be. 217 00:10:32.900 --> 00:10:35.700 Happy because they know that that broker 218 00:10:35.700 --> 00:10:38.400 is probably is really going to work for them. You 219 00:10:38.400 --> 00:10:41.500 know what I mean? Like yeah, you're getting paid X. Okay. Here's what 220 00:10:41.500 --> 00:10:44.500 I need you to do. You get me the best deal possible. You 221 00:10:44.500 --> 00:10:47.200 know what I mean? I need you to get this this you really 222 00:10:47.200 --> 00:10:50.100 do work for me. Yeah. Look how much you're going to get paid. It could 223 00:10:50.100 --> 00:10:54.000 actually solidify the bond potentially. Yeah get also 224 00:10:53.200 --> 00:10:56.900 go the other way, but it's going to be disclosed. So 225 00:10:56.900 --> 00:10:59.300 you want to go you want to go through everything right. Now you 226 00:10:59.300 --> 00:11:02.600 get that started. I mean that was part of yeah part of it, but 227 00:11:02.600 --> 00:11:06.500 obviously, we'll start off basic stuff recipients name 228 00:11:06.500 --> 00:11:07.200 providers name. 229 00:11:08.400 --> 00:11:11.800 Phone number address email disclosure date 230 00:11:11.800 --> 00:11:14.900 total amount Finance fees deducted 231 00:11:14.900 --> 00:11:17.800 or withheld at distribution. No disbursement. 232 00:11:17.800 --> 00:11:20.300 So, okay, so it says fees deducted or was 233 00:11:20.300 --> 00:11:23.300 held at disbursement. So if you deduct things like an 234 00:11:23.300 --> 00:11:25.900 underwriter fee UCC fee some sort of 235 00:11:27.500 --> 00:11:31.200 Fee at the time of funding that needs to be itemized now 236 00:11:30.200 --> 00:11:33.500 most companies already itemized all 237 00:11:33.500 --> 00:11:36.500 the things that are on these disclosures and they're like, this isn't new. 238 00:11:36.500 --> 00:11:39.100 We already do it. There's one of the leading Arguments for 239 00:11:39.100 --> 00:11:42.700 why we didn't need this law because so many companies already disclose all 240 00:11:42.700 --> 00:11:45.900 the things that are being asked for. Yeah. It's kind of like redundant. Yeah 241 00:11:45.900 --> 00:11:48.400 to put it all in a separate form. But in 242 00:11:48.400 --> 00:11:51.400 any case that's what's required Now by law and 243 00:11:51.400 --> 00:11:54.500 so it says fees deducted or withheld at disbursement. So 244 00:11:54.500 --> 00:11:57.700 if the contract says the merchant is getting $10,000 245 00:11:57.700 --> 00:12:00.200 in funding, but they're actually gonna get a deposit for 246 00:12:00.100 --> 00:12:03.400 $8,000 because of all the fees that come 247 00:12:03.400 --> 00:12:06.000 out, you know at the off the top that's gonna have to 248 00:12:06.200 --> 00:12:09.600 be itemized on the disclosure form. So 249 00:12:09.600 --> 00:12:12.300 then you will also the merchant should also see how much 250 00:12:12.300 --> 00:12:15.400 are they actually going to get in the bank? Yeah again, 251 00:12:16.300 --> 00:12:19.200 Many funding companies already provide this very 252 00:12:19.200 --> 00:12:22.500 detailed information. This is this isn't the groundbreaking stuff. 253 00:12:22.500 --> 00:12:26.300 Yeah. However, what is already being provided voluntarily 254 00:12:25.300 --> 00:12:28.300 by most providers is just now 255 00:12:28.300 --> 00:12:32.100 required by law. So if you were a company that didn't disclose 256 00:12:31.100 --> 00:12:34.400 it or disclose it clearly. It's now part 257 00:12:34.400 --> 00:12:35.400 of the contract. Yeah. 258 00:12:36.200 --> 00:12:38.600 We have the the dispersements amount. 259 00:12:39.400 --> 00:12:42.600 Finance charge total repayment amount and 260 00:12:42.600 --> 00:12:45.100 estimated number of paintings. Yeah, you know, 261 00:12:45.100 --> 00:12:48.900 this is where it gets tricky because finance charge it's 262 00:12:48.900 --> 00:12:51.400 like, you know, what's the what's the cost of the funds and 263 00:12:51.400 --> 00:12:55.000 the word finance charge is kind of weird. If you're doing something like buying future 264 00:12:54.800 --> 00:12:57.300 receivables or factoring and invoice 265 00:12:57.300 --> 00:13:00.400 and you're like, yeah, I know what the cost of this transaction is, 266 00:13:00.400 --> 00:13:04.000 but I wouldn't necessarily call it a finance charge. Yeah. However the 267 00:13:03.500 --> 00:13:07.000 form that was provided that's not 100% finalized 268 00:13:06.800 --> 00:13:09.600 listed at the finance charge. So 269 00:13:09.600 --> 00:13:12.100 these are these are terms that you you're going to have 270 00:13:12.100 --> 00:13:13.300 to if you're a Funding Company. 271 00:13:14.200 --> 00:13:17.400 Consult with an attorney on to make sure that the number 272 00:13:17.400 --> 00:13:20.500 you fill in is what the state is basically asking you 273 00:13:20.500 --> 00:13:23.300 to provide because you might think in your mind the finance Chuck 274 00:13:23.300 --> 00:13:26.800 there's no we're not providing financing. We're buying future receivables to 275 00:13:26.800 --> 00:13:29.400 the finance charges zero right 276 00:13:29.400 --> 00:13:32.200 and like technical technically, but that might 277 00:13:32.200 --> 00:13:35.600 not be what the state is talking about. Yeah. And so you you going 278 00:13:35.600 --> 00:13:38.400 to want to consult with somebody who can give you the best answer 279 00:13:38.400 --> 00:13:41.800 because you don't want to be that person who gets a little cute with 280 00:13:41.800 --> 00:13:44.200 the numbers. You know what I mean in the state says 281 00:13:44.200 --> 00:13:47.100 that's not what you were supposed to put. Yeah, right that you 282 00:13:47.100 --> 00:13:50.500 want to make sure that you're doing it, right it said, you know the estimated 283 00:13:50.500 --> 00:13:51.500 number of payments. 284 00:13:52.300 --> 00:13:55.600 This can be tricky too because again if 285 00:13:55.600 --> 00:13:57.800 you're doing something like an elegant MCA. 286 00:13:58.400 --> 00:14:02.000 And you're taking you know, a percentage of sales, you might 287 00:14:01.500 --> 00:14:05.000 not necessarily have a payment schedule 288 00:14:04.900 --> 00:14:07.300 that's fixed. Yeah, it might 289 00:14:07.300 --> 00:14:11.000 be some sort of like estimated system of 290 00:14:10.800 --> 00:14:13.200 what would happen in an ideal or 291 00:14:13.200 --> 00:14:16.400 perfect scenario. But in some cases I 292 00:14:16.400 --> 00:14:19.200 could say the language that is provided here 293 00:14:19.200 --> 00:14:22.700 is actually good. It's an estimated number of payments. 294 00:14:22.700 --> 00:14:25.200 It doesn't say quote number of payments. Is 295 00:14:25.200 --> 00:14:28.300 that estimated number of payments? So that's actually I 296 00:14:28.300 --> 00:14:32.300 would think a good thing. It's an estimated because things 297 00:14:31.300 --> 00:14:34.500 like MCA is all estimated. Anyway, yeah, 298 00:14:34.500 --> 00:14:38.000 and if you're if you have a loan that type 299 00:14:37.200 --> 00:14:39.800 of thing can be estimated too because 300 00:14:41.300 --> 00:14:44.100 Things could change where you're saying. Hey, you know, we're really going 301 00:14:44.100 --> 00:14:47.500 through a hard time here, right? And so you do 302 00:14:47.500 --> 00:14:50.700 have lenders who offer Provisions where if they 303 00:14:50.700 --> 00:14:53.200 go through some type of hardship that they 304 00:14:53.200 --> 00:14:56.300 can modify their payments for a period of time and that could change 305 00:14:56.300 --> 00:14:59.900 the payment schedule though estimated number of payments. I'd 306 00:14:59.900 --> 00:15:02.500 say the a good way to word it. But again you you're 307 00:15:02.500 --> 00:15:05.200 going to want to consult with an attorney when you fill in that blank. 308 00:15:05.200 --> 00:15:05.600 Yeah. 309 00:15:06.500 --> 00:15:09.700 So we'll continue down and so we have payment schedule section 310 00:15:09.700 --> 00:15:13.000 where it's like fixed it's variable. You can check check it 311 00:15:12.200 --> 00:15:15.400 off. You can also check the amount of 312 00:15:15.400 --> 00:15:18.800 fixed payment the frequency of the fixed 313 00:15:18.800 --> 00:15:21.200 payment the variable payment schedule or the 314 00:15:21.200 --> 00:15:24.900 description of the method you said calculate the amount and frequency 315 00:15:24.900 --> 00:15:27.200 of each variable payment the method of 316 00:15:27.200 --> 00:15:29.800 payment and then it says see PH2 317 00:15:30.600 --> 00:15:33.600 Very very good literal reading of it. 318 00:15:33.600 --> 00:15:37.100 So here is here is the potential 319 00:15:36.100 --> 00:15:39.600 Catch-22 of payment schedule. 320 00:15:39.600 --> 00:15:42.100 You have to check as Johnny said fixed or 321 00:15:42.100 --> 00:15:42.900 variable. 322 00:15:43.700 --> 00:15:45.100 Here's the Catch 22. 323 00:15:45.900 --> 00:15:48.300 If you're basically debiting a 324 00:15:48.300 --> 00:15:51.200 fixed amount because you don't know what a Merchant's actual 325 00:15:51.200 --> 00:15:54.500 sales are unless they're reconcile. You might be thinking. Well, it's 326 00:15:54.500 --> 00:15:57.300 technically fixed. But if you then pitch the product 327 00:15:57.300 --> 00:16:00.800 as an MCA has no fixed payments is based 328 00:16:00.800 --> 00:16:03.500 upon your future sales. Yeah, and then you check the box 329 00:16:03.500 --> 00:16:06.200 and say fix payments. Yeah, you've now kind 330 00:16:06.200 --> 00:16:09.200 of contradicted yourself, you've promoted something as no fixed 331 00:16:09.200 --> 00:16:12.500 payments and then you check the box and then you put fix payments on 332 00:16:12.500 --> 00:16:13.300 your disclosure form. 333 00:16:14.300 --> 00:16:17.400 So you're going and some people might be asking is your 334 00:16:17.400 --> 00:16:20.900 product really a purchase the future sales if your 335 00:16:20.900 --> 00:16:24.000 payments are checked the Box definitely fixed 336 00:16:23.600 --> 00:16:26.600 right? Maybe that's not the appropriate box 337 00:16:26.600 --> 00:16:29.100 to check. I'm not an attorney. This is 338 00:16:29.100 --> 00:16:32.200 why we're talking about this because if you're like, yeah, 339 00:16:32.200 --> 00:16:35.300 it's some form. I got a disclose blah blah. 340 00:16:35.300 --> 00:16:38.700 Yeah, you know, I'm a good actor. I'll you 341 00:16:38.700 --> 00:16:41.200 know, I'll check the box and do whatever is required. You don't 342 00:16:41.200 --> 00:16:45.400 want to end up in a situation where you check certain boxes and they're 343 00:16:44.400 --> 00:16:47.700 the gotcha moment. Yeah, and you build out 344 00:16:47.700 --> 00:16:51.100 something that you shouldn't have because it wasn't 100% consistent 345 00:16:50.100 --> 00:16:53.700 with the rest of your contract. It may 346 00:16:53.700 --> 00:16:56.600 be that your product actually has valuable payments, even 347 00:16:56.600 --> 00:17:00.000 if it has fixed like qualities either good 348 00:16:59.300 --> 00:17:02.400 questions for an attorney, but I have to talk about 349 00:17:02.400 --> 00:17:05.500 them and talk about how to go either way because I 350 00:17:05.500 --> 00:17:08.600 want you to make sure that you do it correctly. Yeah. 351 00:17:10.200 --> 00:17:13.200 Um, so we went to the net well, all right, is that all for 352 00:17:13.200 --> 00:17:16.300 the yeah, that's that's all for the payment schedule. So the next section is 353 00:17:16.300 --> 00:17:19.600 the description of all other potential fees and charges not 354 00:17:19.600 --> 00:17:21.300 included in the finance charge. 355 00:17:22.200 --> 00:17:23.300 So in this area 356 00:17:25.100 --> 00:17:28.300 You know it said, you know, it's interesting is that description of all of their potential 357 00:17:28.300 --> 00:17:31.100 fees and charges so there could be fees where 358 00:17:31.100 --> 00:17:34.600 if somebody bounces a a debit that they incurs 359 00:17:34.600 --> 00:17:37.600 some type of fee. I've seen things where like for each 360 00:17:37.600 --> 00:17:40.500 of contract fee or if you breach the contract. 361 00:17:40.500 --> 00:17:43.300 There's a fee there's I've seen things like stacking feet. 362 00:17:43.300 --> 00:17:46.500 If you go out and breach the contract by getting additional funds 363 00:17:46.500 --> 00:17:49.900 and you stack then you've you've you've 364 00:17:49.900 --> 00:17:52.300 encouraged some type of stacking fee that gets 365 00:17:52.300 --> 00:17:55.700 added on and I imagine this would also include as 366 00:17:55.700 --> 00:17:58.400 we're talking about before these separate fee 367 00:17:58.400 --> 00:18:01.800 at the broker is charging. Yeah, the 368 00:18:01.800 --> 00:18:04.100 merchant I imagine that also includes that 369 00:18:04.100 --> 00:18:07.300 not an attorney but it's something you need to be thinking about and all 370 00:18:07.300 --> 00:18:10.400 other potential fees so good just to 371 00:18:10.400 --> 00:18:13.200 recap so we have finance charge section distribute your 372 00:18:13.200 --> 00:18:16.100 Mountain section total repayment amount section. Then we have 373 00:18:16.100 --> 00:18:19.900 an area where all the other potential fees and 374 00:18:19.900 --> 00:18:22.900 charges. I'm interested because it's potential fees 375 00:18:22.900 --> 00:18:24.800 and charges not including. 376 00:18:25.600 --> 00:18:25.800 finance charge 377 00:18:27.400 --> 00:18:30.600 The following one it's a description of collateral requirements or 378 00:18:30.600 --> 00:18:33.100 security interests. Let's talk about 379 00:18:33.100 --> 00:18:33.700 that one. Yeah. 380 00:18:34.400 --> 00:18:37.700 Description of collateral requirements is security interests. So 381 00:18:37.700 --> 00:18:40.500 you may be under the impression that 382 00:18:40.500 --> 00:18:43.600 certain products are unsecured on secured 383 00:18:43.600 --> 00:18:46.300 lending. Right? No collateral. No personal 384 00:18:46.300 --> 00:18:49.800 guarantees unsecured blah blah and then 385 00:18:49.800 --> 00:18:52.600 what happens that company goes and files a UCC 386 00:18:52.600 --> 00:18:55.500 placing a lean on certain assets. 387 00:18:55.500 --> 00:18:57.500 Hmm. Is it secure now? 388 00:18:58.400 --> 00:19:01.500 Is that it really unsecured? I don't know the answer 389 00:19:01.500 --> 00:19:04.400 to that but you need to think through these things very clearly 390 00:19:04.400 --> 00:19:08.500 when it says description of collateral requirements or security interests. 391 00:19:08.500 --> 00:19:11.700 Think about whether or not you have a security interest and what 392 00:19:11.700 --> 00:19:14.700 you do after you fund do you file UCC 393 00:19:14.700 --> 00:19:17.800 that says you have a security interest it's possible. 394 00:19:17.800 --> 00:19:20.400 If so, you may 395 00:19:20.400 --> 00:19:23.400 be required to put exactly what that security interest is 396 00:19:23.400 --> 00:19:26.200 in the Box. Yeah, you go into need 397 00:19:26.200 --> 00:19:29.300 to consult an attorney yet again, but it's something you 398 00:19:29.300 --> 00:19:32.500 need to think about because it's so easy to go out there and say no personal this 399 00:19:32.500 --> 00:19:35.600 know that blah blah unsecured and 400 00:19:35.600 --> 00:19:38.400 then all the sudden there the UCC filing or something else 401 00:19:38.400 --> 00:19:41.400 to say that actually there was a 402 00:19:41.400 --> 00:19:44.400 security interest the whole time right you're gonna 403 00:19:44.400 --> 00:19:47.200 need to disclose whatever that security interest is in the 404 00:19:47.200 --> 00:19:50.400 Box on the form to virginia-based businesses something 405 00:19:50.400 --> 00:19:51.900 to think about and ask your lawyers about 406 00:19:53.400 --> 00:19:56.200 So the following section after that we spoke about it was 407 00:19:56.200 --> 00:19:57.100 a broker compensation. 408 00:19:58.100 --> 00:20:02.100 On the side of it. It asks a specific question is the provider a 409 00:20:01.100 --> 00:20:04.400 pain compensation directly to a broker. You 410 00:20:04.400 --> 00:20:07.400 can check yes, or you can check no and then it the following 411 00:20:07.400 --> 00:20:10.500 section after that. It says if yes, the amount of compensation being 412 00:20:10.500 --> 00:20:11.800 paid directly to the broker. 413 00:20:12.800 --> 00:20:15.600 So yeah clarify that up. Is there 414 00:20:15.600 --> 00:20:18.200 anything else you want to save regarding that? No, not really. 415 00:20:18.200 --> 00:20:21.500 Okay fall after 416 00:20:21.500 --> 00:20:23.900 that is the description of prepayment policies. 417 00:20:24.800 --> 00:20:27.900 Alrighty description of prepayment policies. 418 00:20:27.900 --> 00:20:31.000 So some lenders and funders offer 419 00:20:30.400 --> 00:20:34.100 some type of discount or penalty. If 420 00:20:33.100 --> 00:20:36.700 they decide to exit the contract early, you 421 00:20:36.700 --> 00:20:39.400 could either you could go either way some literally say 422 00:20:39.400 --> 00:20:42.200 there's a penalty for paying off early. Obviously you 423 00:20:42.200 --> 00:20:46.400 get a discount for paying off early, but it can be confusing because 424 00:20:45.400 --> 00:20:48.400 products like loans and 425 00:20:48.400 --> 00:20:52.100 purchases the future sales are different, right? 426 00:20:53.200 --> 00:20:56.600 So if someone takes out in an MCA, for example, 427 00:20:56.600 --> 00:20:59.000 and they decide they want to 428 00:20:59.400 --> 00:21:02.400 exit the contract early, they might be thinking. Well, I've 429 00:21:02.400 --> 00:21:05.500 only incurred a certain amount of Interest up until this point, right, but 430 00:21:05.500 --> 00:21:08.400 of course there is no interest. Yeah, someone has bought a 431 00:21:08.400 --> 00:21:12.200 fixed amount of your receivables that 432 00:21:11.200 --> 00:21:14.400 is that is, you know indifferent to 433 00:21:14.400 --> 00:21:17.500 time you could say it's only been 30 days. It's like so 434 00:21:18.500 --> 00:21:21.800 We purchased these receivables. Nothing is accruing. There's 435 00:21:21.800 --> 00:21:24.500 no interest accruing. We just purchased a fixed amount. Do 436 00:21:24.500 --> 00:21:27.400 you want to exit the contract early, you know 30 days 437 00:21:27.400 --> 00:21:30.500 in you can feel free but the cost 438 00:21:30.500 --> 00:21:33.500 is the same. Yeah, you don't get a discount because the interest 439 00:21:33.500 --> 00:21:36.400 is not accruing. However, there are funding companies 440 00:21:36.400 --> 00:21:39.400 out there that say it I get it, you know, 441 00:21:39.400 --> 00:21:42.100 we we just did this deal. It's only been a month 442 00:21:42.100 --> 00:21:43.800 or so. It's only been two months. 443 00:21:44.800 --> 00:21:48.100 We'll have some sort of built-in discount. Yeah, 444 00:21:47.100 --> 00:21:51.200 that might already be in the contract in 445 00:21:50.200 --> 00:21:53.300 some form or fashion. But now it has 446 00:21:53.300 --> 00:21:57.200 to be formalized in the actual disclosure form itself 447 00:21:56.200 --> 00:21:59.000 description of the prepayment policy. 448 00:21:59.800 --> 00:22:02.900 Yep, and then after that you can there's section 449 00:22:02.900 --> 00:22:05.200 where you sign and you date everything. So we're 450 00:22:05.200 --> 00:22:08.400 gonna go to the back page. We have the recipients name address 451 00:22:08.400 --> 00:22:11.400 disclosure date provider's name and then there's 452 00:22:11.400 --> 00:22:14.200 a big section in the back that says the information provider below 453 00:22:14.200 --> 00:22:16.400 relates to the following check items. 454 00:22:16.700 --> 00:22:18.500 You have your very own payment schedule. 455 00:22:19.300 --> 00:22:22.200 Description of the method used to calculate the amount and 456 00:22:22.200 --> 00:22:25.700 frequency of each variable payment you 457 00:22:25.700 --> 00:22:28.700 have the method of payment. Then you have another box 458 00:22:28.700 --> 00:22:31.500 that says description of all other potential 459 00:22:31.500 --> 00:22:35.100 fees and charges not included in the finance charge description 460 00:22:34.100 --> 00:22:37.400 of collateral requirements or security interests 461 00:22:37.400 --> 00:22:40.000 and description of premium policies. 462 00:22:41.400 --> 00:22:44.300 Yeah, so it basically asking you to check the boxes 463 00:22:44.300 --> 00:22:47.100 for whichever one's apply and to have the description of 464 00:22:47.100 --> 00:22:47.600 it. So 465 00:22:48.300 --> 00:22:48.600 if 466 00:22:49.500 --> 00:22:52.700 You have a long prepayment policy. You 467 00:22:52.700 --> 00:22:56.100 want to check the box and make sure that's disclosed. So 468 00:22:55.100 --> 00:22:58.300 this format that stands it's only two 469 00:22:58.300 --> 00:23:01.400 it's only two pages, right? This was the draft form. 470 00:23:01.400 --> 00:23:05.000 This is the one that they wanted everyone to to use. There's 471 00:23:04.300 --> 00:23:07.600 been some pushback on it. But in any 472 00:23:07.600 --> 00:23:10.400 case the thing that Johnny and I have just discussed are 473 00:23:10.400 --> 00:23:14.400 required to be disclosed formally effective 474 00:23:13.400 --> 00:23:17.700 tomorrow with virginia-based businesses 475 00:23:17.700 --> 00:23:18.500 and 476 00:23:19.800 --> 00:23:22.000 Starting in November you're going to 477 00:23:22.300 --> 00:23:25.400 have to register with the state if you want to continue doing business 478 00:23:25.400 --> 00:23:28.200 in the state of Virginia. So let me ask you 479 00:23:28.200 --> 00:23:32.300 this because a lot of people are probably gonna ask this if you 480 00:23:31.300 --> 00:23:34.300 are out of state you're not in 481 00:23:34.300 --> 00:23:37.500 Virginia, but you are doing or you want to do business in 482 00:23:37.500 --> 00:23:40.700 Virginia. Have a client there. You have to register 483 00:23:40.700 --> 00:23:42.000 later on in the year. 484 00:23:42.800 --> 00:23:45.500 Yeah, you will have to write you will have to register lay not 485 00:23:45.500 --> 00:23:48.500 later on inside only for the Virginia Base companies 486 00:23:48.500 --> 00:23:51.100 in Virginia. This is for anybody that wants to 487 00:23:51.100 --> 00:23:54.400 business in Virginia, they have to register with the state. That's 488 00:23:54.400 --> 00:23:57.100 right. And then they're gonna have to pass background from what I 489 00:23:57.100 --> 00:24:00.100 read. It's gonna be a background check and that was 490 00:24:00.100 --> 00:24:03.100 the other thing. There's like there's like a fee that yeah. It's like 491 00:24:03.100 --> 00:24:06.300 500 bucks. Yeah. So imagine doing that at 50 492 00:24:06.300 --> 00:24:09.800 states. You have to pay that once a year. Yeah, 500 times 493 00:24:09.800 --> 00:24:12.700 50 once a year plus this 494 00:24:12.700 --> 00:24:15.200 date can also audit you 495 00:24:15.200 --> 00:24:18.400 it can investigate you and you bear the 496 00:24:18.400 --> 00:24:21.800 expenses for that audit or investigation. So if 497 00:24:21.800 --> 00:24:25.000 they feel that you are not complying or doing something wrong, they 498 00:24:24.200 --> 00:24:27.300 open up some type of investigation. Maybe it's 499 00:24:27.300 --> 00:24:30.500 an innocent. Maybe you haven't done anything wrong and they're just doing they just 500 00:24:30.500 --> 00:24:33.300 decided we're gonna audit, you know, a couple of these 501 00:24:33.300 --> 00:24:36.100 companies just make sure they're doing what just they're supposed to 502 00:24:36.100 --> 00:24:39.100 be doing they come in. They send a few people in and say 503 00:24:39.100 --> 00:24:42.200 we want all these records. We want your disclosure reforms you want your 504 00:24:42.200 --> 00:24:42.700 contract. 505 00:24:42.700 --> 00:24:45.300 To what the content information for the businesses, we want 506 00:24:45.300 --> 00:24:48.800 the performance of the advances of the loans or the factoring 507 00:24:48.800 --> 00:24:51.100 transactions that you made give that all to us and 508 00:24:51.100 --> 00:24:54.300 you're like gosh that's going to cost like I'm gonna need to hire Personnel to 509 00:24:54.300 --> 00:24:57.300 give that to you. You know, I mean that's gonna cost us like a few hundred grand 510 00:24:57.300 --> 00:25:01.100 over the next few months to give you all the data you need. Well that's 511 00:25:00.100 --> 00:25:03.300 a cost that you're going to have to incur The 512 00:25:03.300 --> 00:25:06.200 Regulators are not going to reimburse you first, we're going 513 00:25:06.200 --> 00:25:09.100 through all of that. So if you want to play, you know at the 514 00:25:09.100 --> 00:25:12.300 big kids table and being the funding company, you have to be able you have 515 00:25:12.300 --> 00:25:15.500 to be prepared. Yeah to have real a real 516 00:25:15.500 --> 00:25:18.200 compliance budget set aside. Here. We are. We're just 517 00:25:18.200 --> 00:25:22.200 talking about one state. Yeah other states have passed similar laws 518 00:25:21.200 --> 00:25:25.000 who could do similar audits, you 519 00:25:24.100 --> 00:25:27.400 could be audited multiple States and 520 00:25:27.400 --> 00:25:30.200 run up a bill of you know hundreds of thousands of dollars a year 521 00:25:30.200 --> 00:25:32.600 just in you know compliance these and you're like, 522 00:25:33.300 --> 00:25:36.700 Over are you for real? Yeah. Yes. Yes or 523 00:25:36.700 --> 00:25:40.200 for real. I think the big interesting thing is that we've 524 00:25:39.200 --> 00:25:44.200 talked about a lot here between California New 525 00:25:43.200 --> 00:25:46.600 York, Utah Maryland, like there's 526 00:25:46.600 --> 00:25:49.900 a lot of movement when it comes to like disclosure 527 00:25:49.900 --> 00:25:52.400 laws and whatnot. And we've seen this pattern 528 00:25:52.400 --> 00:25:55.200 of oh, like, you know, it's gonna take 529 00:25:55.200 --> 00:25:58.100 time. It's gonna take time. Like we just bought some more time, you know, 530 00:25:58.100 --> 00:26:01.900 whatever the situation that are being like, there's always a big gap of 531 00:26:01.900 --> 00:26:04.600 time before things actually start going into 532 00:26:04.600 --> 00:26:07.500 full swing action and tomorrow. We're actually seeing 533 00:26:07.500 --> 00:26:10.300 it go from being on the table and 534 00:26:10.300 --> 00:26:13.800 be presented to State leaders to actually 535 00:26:13.800 --> 00:26:16.300 now going into full force practice. 536 00:26:16.300 --> 00:26:19.300 So I think a lot of people from what I've seen they kind 537 00:26:19.300 --> 00:26:22.400 of just like scoff and they're like, oh like they always 538 00:26:22.400 --> 00:26:25.700 say that it's never gonna happen, you know between disclosure laws 539 00:26:25.700 --> 00:26:28.700 regulation laws and whatnot. But now it's it's coming 540 00:26:28.700 --> 00:26:31.400 full force. All right, so we were talking about something before we 541 00:26:31.400 --> 00:26:33.000 went live, right and I think 542 00:26:33.200 --> 00:26:36.300 That there could be some of you out there who 543 00:26:36.300 --> 00:26:40.000 say I'm one of the little guys we're very 544 00:26:39.200 --> 00:26:42.000 small. We fly under the radar. We make a little 545 00:26:42.100 --> 00:26:45.500 bit of money. It's a good business. We don't have the money for all this compliance. 546 00:26:45.500 --> 00:26:48.600 We're not going to do it. We're just gonna do good 547 00:26:48.600 --> 00:26:51.500 on his business with our customers, but we're small. Yeah, 548 00:26:51.500 --> 00:26:55.300 we're not the ones at The Regulators are going after we're just 549 00:26:55.300 --> 00:26:57.500 you know, we're not going to do any of this stuff or whatever. 550 00:26:58.400 --> 00:27:01.700 The problem is it only takes one person to 551 00:27:01.700 --> 00:27:04.000 report you right? It could be 552 00:27:04.300 --> 00:27:04.600 a competitor. 553 00:27:05.500 --> 00:27:08.200 You wanted you want to deal against somebody who is complying and 554 00:27:08.200 --> 00:27:11.400 you're not they're gonna nail you for it. They're gonna call the regulator and 555 00:27:11.400 --> 00:27:14.300 say get these guys out of Virginia. Yeah, right and you're like, I'm small 556 00:27:14.300 --> 00:27:15.300 No One's Gonna care about me. 557 00:27:16.200 --> 00:27:19.200 I think they are gonna care about you. I think that these are things 558 00:27:19.200 --> 00:27:22.500 that you're going to have to comply with no matter how big or small 559 00:27:22.500 --> 00:27:25.200 you are. It may be painful. It is the fact of 560 00:27:25.200 --> 00:27:28.700 life. We've been talking about this happening and coming for years. It's 561 00:27:28.700 --> 00:27:31.800 finally happening. Now. We need to work now 562 00:27:31.800 --> 00:27:34.400 we need to figure out how do we work in a world where we 563 00:27:34.400 --> 00:27:37.700 just comply with the rules that exist. Right? 564 00:27:37.700 --> 00:27:40.500 This is a law that's already passed. There's 565 00:27:40.500 --> 00:27:43.600 no lobbyists to call to say, how do we not make this law that 566 00:27:43.600 --> 00:27:46.800 ship is sailed. The ship is sailed in California. The ship 567 00:27:46.800 --> 00:27:49.600 is sailed in New York, get ready to start complying for 568 00:27:49.600 --> 00:27:52.200 real. These are the laws now. This is 569 00:27:52.200 --> 00:27:55.400 the one in Virginia and it goes into effect tomorrow. It's really 570 00:27:55.400 --> 00:27:58.500 not that crazy the Virginia one the Virginia one doesn't 571 00:27:58.500 --> 00:28:01.700 even ask you to disclose an annual percentage rate, 572 00:28:01.700 --> 00:28:04.900 which is one of the sticking points for companies like Factory 573 00:28:04.900 --> 00:28:07.700 and factoring companies and MCA providers 574 00:28:07.700 --> 00:28:10.600 because their products don't have an APR you 575 00:28:10.600 --> 00:28:14.200 can't calculate one because they don't want to because mathematically 576 00:28:13.200 --> 00:28:15.800 it's not possible because you don't have 577 00:28:15.900 --> 00:28:16.900 element of time 578 00:28:17.600 --> 00:28:20.600 Virginia seemed to recognize that and 579 00:28:20.600 --> 00:28:23.600 so there's no APR disclosure requirement. So 580 00:28:23.600 --> 00:28:27.100 one of the biggest sticking points on disclosure is 581 00:28:26.100 --> 00:28:29.800 not a part of Virginia. There's no APR 582 00:28:29.800 --> 00:28:32.700 disclosure. That's that's great. I'm in 583 00:28:32.700 --> 00:28:35.700 a lot of lenders already disclosing APR as it 584 00:28:35.700 --> 00:28:38.500 is and they don't usually care. Yeah sure. We put an APR 585 00:28:38.500 --> 00:28:41.500 already who cares, but if you can't calculate one, that's 586 00:28:41.500 --> 00:28:44.200 where companies start to get really upset. Yeah, because how can 587 00:28:44.200 --> 00:28:47.100 we disclose something that doesn't exist if we make up 588 00:28:47.100 --> 00:28:47.600 a number? 589 00:28:48.300 --> 00:28:51.700 Right, even if it's a high one, but we made it up because 590 00:28:51.700 --> 00:28:54.200 we had to put something so we put a high number that's 591 00:28:54.200 --> 00:28:57.700 made up. They're worried. They're going to get in trouble for it 592 00:28:57.700 --> 00:29:00.700 being wrong and it will be wrong because the number doesn't exist. It's 593 00:29:00.700 --> 00:29:03.700 the Catch 22 Yeah, right. And so Virginia 594 00:29:03.700 --> 00:29:06.400 does not have an APR disclosure. That's one of the that's 595 00:29:06.400 --> 00:29:09.700 one of the great things about the Virginia disclosure law. It is 596 00:29:09.700 --> 00:29:12.700 that it's all the basic stuff that people already disclosing. It's 597 00:29:12.700 --> 00:29:15.400 just now been way more formalized you're going 598 00:29:15.400 --> 00:29:18.600 to have to register with the state and the the merchants. 599 00:29:18.600 --> 00:29:22.300 They're going to know how much commission the broker is getting. Yeah, and 600 00:29:21.300 --> 00:29:24.500 I think like we said earlier if you are 601 00:29:24.500 --> 00:29:25.900 planning to just completely 602 00:29:27.300 --> 00:29:30.100 Not even like crossout Virginia and like you said 603 00:29:30.100 --> 00:29:34.200 we have California. We have New York, Utah Maryland, 604 00:29:33.200 --> 00:29:36.000 like all these states, you know 605 00:29:36.300 --> 00:29:39.400 that this has been on their radar to us some type 606 00:29:39.400 --> 00:29:42.300 of extent and wouldn't be surprised. If we 607 00:29:42.300 --> 00:29:46.600 start seeing more of this like actually coming into fruition 608 00:29:45.600 --> 00:29:48.500 in the next couple of months two years. 609 00:29:48.500 --> 00:29:51.600 Yeah. Yeah, you mentioned Maryland has failed to 610 00:29:51.600 --> 00:29:54.300 pass their their own version of this law 611 00:29:54.300 --> 00:29:57.300 like three or four times now, it's but it's always come up. It's 612 00:29:57.300 --> 00:30:00.600 always come up. Yeah, it'll come back again next year eventually. I suppose 613 00:30:00.600 --> 00:30:03.100 some form or passion of it will pass. I don't know what that 614 00:30:03.100 --> 00:30:06.300 will look like Connecticut also attempted to 615 00:30:06.300 --> 00:30:09.500 pass a similar law and that one failed this 616 00:30:09.500 --> 00:30:12.900 year, but I I am under the impression from 617 00:30:12.900 --> 00:30:15.800 very reputable and knowledgeable sources 618 00:30:15.800 --> 00:30:18.200 that Connecticut will be reintroducing its own 619 00:30:18.200 --> 00:30:21.500 law, except you're like as Johnny mentioned if you're 620 00:30:21.500 --> 00:30:24.100 just like I'm just not gonna do business in Virginia. It sounds 621 00:30:24.100 --> 00:30:26.800 like too much work. Well, then you'll be writing up New York gonna be ready. 622 00:30:26.900 --> 00:30:29.600 California are going to write off Maryland eventually going 623 00:30:29.600 --> 00:30:30.600 to run off Connecticut events. 624 00:30:31.200 --> 00:30:34.500 It's painful honestly, you know, I mean, I understand if you're 625 00:30:34.500 --> 00:30:38.200 a funding company or broker. It sounds expensive. Yeah, right, it 626 00:30:37.200 --> 00:30:40.600 would be great. If there was just one size fits 627 00:30:40.600 --> 00:30:43.100 all it wasn't 50 state regulation. I don't 628 00:30:43.100 --> 00:30:46.700 think anyone wants to have to deal with the regulations and 629 00:30:46.700 --> 00:30:49.500 50 separate states because the cost 630 00:30:49.500 --> 00:30:52.500 of compliance is real and it kind of hurts the 631 00:30:52.500 --> 00:30:55.200 little guys the most yeah, perhaps that's kind of 632 00:30:55.200 --> 00:30:58.300 by Design where The Regulators don't have to worry about 10 million 633 00:30:58.300 --> 00:31:01.000 itty bitty Brokers. You know what I 634 00:31:01.200 --> 00:31:04.200 mean? They can just focus on the handful of large ones who have the money to pay for 635 00:31:04.200 --> 00:31:07.400 everything Sims unfair but that's just kind of the world 636 00:31:07.400 --> 00:31:10.500 that that we live in. Yeah. So again, 637 00:31:10.500 --> 00:31:13.500 this goes into effect tomorrow July first tomorrow. 638 00:31:13.500 --> 00:31:16.500 Hello tomorrow. Yeah, you have no time what you 639 00:31:16.500 --> 00:31:19.500 have your form. Are you ready to do this? I'm not kidding. You have 640 00:31:19.500 --> 00:31:22.300 something you know what the law says. Have you 641 00:31:22.300 --> 00:31:25.600 talk to your lawyer? You really got to know you really got to know what's going on. Yeah tomorrow, 642 00:31:25.600 --> 00:31:27.100 Virginia disclosure. 643 00:31:28.400 --> 00:31:31.200 So you have any questions contact your lawyer about this because we're not 644 00:31:31.200 --> 00:31:34.200 lawyers instead of like don't contact your bank 645 00:31:34.200 --> 00:31:37.500 about it. Contact your lord. Yeah. Well because it's it's like 646 00:31:37.500 --> 00:31:40.600 it's true. It's true. Yeah contact your lawyer. And again, 647 00:31:40.600 --> 00:31:44.500 we will be keeping up to date with the other regulations 648 00:31:43.500 --> 00:31:46.800 and rules and laws that are going into going 649 00:31:46.800 --> 00:31:49.100 into effect for other states and if you 650 00:31:49.100 --> 00:31:53.400 want to keep up with them and we read, you know the stories 651 00:31:53.400 --> 00:31:56.400 about the New York regulation and the laws and disclosures, 652 00:31:56.400 --> 00:31:59.200 California, Utah, Maryland Etc. 653 00:31:59.200 --> 00:32:02.600 You can go to debank.com. That's where all that information is found. 654 00:32:02.600 --> 00:32:05.300 And I know this is this is always 655 00:32:05.300 --> 00:32:08.500 been a Hot Topic especially, you know, we're in 656 00:32:08.500 --> 00:32:10.300 New York. So when you live in, New York 657 00:32:11.800 --> 00:32:14.200 But yeah, I mean last year for broker Fair 658 00:32:14.200 --> 00:32:17.500 we had you know, someone kind of oh, we had a couple lawyers sit down 659 00:32:17.500 --> 00:32:20.500 and have a conversation about it and we're gonna 660 00:32:20.500 --> 00:32:23.100 do that again, by the way, so broker Affairs coming up in New York 661 00:32:23.100 --> 00:32:26.500 October 24th, and because we're not lawyers, we 662 00:32:26.500 --> 00:32:29.800 will have people who are knowledgeable who are Attorneys at 663 00:32:29.800 --> 00:32:32.500 the event. We haven't named it. We haven't named speakers yet, but we 664 00:32:32.500 --> 00:32:36.100 will have Attorneys at the event who can speak it. Yeah 665 00:32:35.100 --> 00:32:38.300 who can speak to yeah. It's on the screen who can 666 00:32:38.300 --> 00:32:41.400 speak to those things and kind of guide you through it. Yeah 667 00:32:41.400 --> 00:32:44.400 at the end of the day, you're probably gonna have to retain counsel, you 668 00:32:44.400 --> 00:32:47.100 know, you may not be able to to take everything you need 669 00:32:47.100 --> 00:32:50.700 to know away from a panel, but they are usually very informative and 670 00:32:50.700 --> 00:32:54.100 they've always been almost like, you know hypothetical. Yeah, 671 00:32:53.100 --> 00:32:56.800 like here's what we know so far but 672 00:32:56.800 --> 00:32:59.400 nothing and I'm just gonna stress 673 00:32:59.400 --> 00:33:02.700 this because I've seen this a lot play out number one, 674 00:33:02.700 --> 00:33:05.500 do your due diligence and and make sure you have 675 00:33:05.500 --> 00:33:08.500 the right information, you know, go online, 676 00:33:08.500 --> 00:33:11.400 you know read up on it, but do your due diligence 677 00:33:11.700 --> 00:33:14.700 A business owner and the second thing is don't just 678 00:33:14.700 --> 00:33:17.200 assume I think you know if you have 679 00:33:17.200 --> 00:33:20.700 questions contact your lawyer because I've seen 680 00:33:20.700 --> 00:33:23.400 a lot of people just make assumptions and obviously assumptions are 681 00:33:23.400 --> 00:33:26.400 never the best way to go about stuff like make sure 682 00:33:26.400 --> 00:33:29.800 you have and you fully understand what's going on because this will 683 00:33:29.800 --> 00:33:32.400 impact your business if you get audited, you know, 684 00:33:32.400 --> 00:33:35.500 and you don't have the proper documentation the 685 00:33:35.500 --> 00:33:37.600 proper you're not following the proper protocols. 686 00:33:38.500 --> 00:33:41.400 You're in trouble. Yeah, and it's also good to 687 00:33:41.400 --> 00:33:44.300 have an attorney who has knowledge and 688 00:33:44.300 --> 00:33:47.600 experience with these particular products. If you're like my neighbors a 689 00:33:47.600 --> 00:33:50.300 real estate lawyer. Maybe she you know, 690 00:33:50.300 --> 00:33:54.200 she or he can help me. Mmm, maybe but 691 00:33:53.200 --> 00:33:56.600 it's better if they have kind of a broad foundation 692 00:33:56.600 --> 00:33:59.400 in the subject matter itself. You know, 693 00:33:59.400 --> 00:34:02.200 the whole my friend is a lawyer who does some random 694 00:34:02.200 --> 00:34:05.300 lawyer stuff might not be the best lawyer. Yeah. I was just 695 00:34:05.300 --> 00:34:08.600 that at the alternative Finance Bar Association conference and 696 00:34:08.600 --> 00:34:12.100 there was like a hundred attorneys who are all knowledgeable 697 00:34:11.100 --> 00:34:14.500 about this stuff. So I'm not recommending any 698 00:34:14.500 --> 00:34:17.200 individual one and there's tons of them out there. 699 00:34:17.200 --> 00:34:20.200 Yeah, in fact using the alternative Finance Bar 700 00:34:20.200 --> 00:34:23.500 Association and the starting point to find the right person might 701 00:34:23.500 --> 00:34:26.300 even might even be a good choice if you like Sean's keep 702 00:34:26.300 --> 00:34:29.200 saying call my lawyer. I don't have one. Yeah, where am I 703 00:34:29.200 --> 00:34:32.900 supposed to find this lawyer? Yeah, and definitely have a 704 00:34:32.900 --> 00:34:35.500 lawyer you definitely yeah, if you're going to be a Funding 705 00:34:35.500 --> 00:34:38.300 Company going forward you're going to need coun. 706 00:34:38.400 --> 00:34:42.200 To guide you through it. The states are going to regulate and 707 00:34:41.200 --> 00:34:44.700 enforce this to some extent and the 708 00:34:44.700 --> 00:34:47.300 whole idea of I'm little they're never going to come after 709 00:34:47.300 --> 00:34:50.300 me type of thing. You have to know this business is 710 00:34:50.300 --> 00:34:53.400 highly competitive and Cutthroat the first person who's gonna 711 00:34:53.400 --> 00:34:56.300 tell on you is going to be your competitor and they're 712 00:34:56.300 --> 00:34:59.700 gonna love that you're small because they're gonna know that you cannot afford 713 00:34:59.700 --> 00:35:02.300 to deal with the consequences. So the whole 714 00:35:02.300 --> 00:35:03.700 I'm small they won't bother me. 715 00:35:04.500 --> 00:35:07.400 You know, you know how you know this business, right? Yeah, 716 00:35:07.400 --> 00:35:10.400 everyone wants everyone and all the competition guy. They 717 00:35:10.400 --> 00:35:13.100 want to win all the deals for themselves. Somebody finds out. 718 00:35:13.100 --> 00:35:16.600 Somebody's not complying they're gonna tattle on you. So you're 719 00:35:16.600 --> 00:35:18.900 the best thing you can do is comply. Yeah. 720 00:35:19.700 --> 00:35:22.500 So again reach out to your lawyer and you 721 00:35:22.500 --> 00:35:25.400 want to review some of the stories that we've done whether it's 722 00:35:25.400 --> 00:35:28.300 here in in the dbank studio or on the 723 00:35:28.300 --> 00:35:31.400 website go to thebank.com. Check us out on social media 724 00:35:31.400 --> 00:35:34.600 LinkedIn Twitter Facebook and Instagram and then 725 00:35:34.600 --> 00:35:37.500 don't forget about broker Fair on October 24th. That's gonna 726 00:35:37.500 --> 00:35:41.400 be at the Time Square Merit Marquee and 727 00:35:40.400 --> 00:35:43.500 it's gonna be an all-day special early 728 00:35:43.500 --> 00:35:46.400 birds, but an all-day event early bird specials 729 00:35:46.400 --> 00:35:49.800 that is going to be closing soon. We're not gonna announce one, but 730 00:35:49.800 --> 00:35:52.000 just a heads up. So I'm definitely take advantage of 731 00:35:52.000 --> 00:35:52.400 that. 732 00:35:53.200 --> 00:35:56.400 And we'll be talking all about the disclosure laws at broker 733 00:35:56.400 --> 00:35:59.400 fare. In addition to ways to make more money. It's not 734 00:35:59.400 --> 00:36:02.100 going to be all legal stuff and doom and gloom you'll be able 735 00:36:02.100 --> 00:36:05.200 to network meet all the right people do more business do more deals 736 00:36:05.200 --> 00:36:08.100 make more money. We'll have it all at broker Fair. All right. 737 00:36:08.100 --> 00:36:11.400 So for all of us here in New York, I'm Johnny Fernandez. I'm 738 00:36:11.400 --> 00:36:13.000 Sean Murray. We'll see you guys next time. 739 00:36:43.400 --> 00:36:43.400 you