Covid: A Few Thoughts for Those of Us Who Lend to the Masses
A word about Covid & Plagues: History may not repeat BUT it certainly rhymes. In other words, we’ve suffered plagues, environmental catastrophes, economic shocks, depressions, recessions… and ALWAYS recovered eventually.
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The Covid event is simply a hiccup in time. The 99% will always remain in debt. Consumerism/Instant gratification is in their DNA. Depending on who funds the “Report/Analysis,” approximately 65% - 75% of USA households cannot access $400 cash when facing a sudden financial emergency. [Think car repair, fill a prescription, keep the lights on, self-employed contractors in need of purchasing materials for a small construction job to be paid by a home/apartment owner upon completion of the
work…] This is the situation throughout the world! It has always been this way. [For perspective, read “Debt: The First 5000 Years.”]
It’s clear that the government printing presses, stipends, direct checks, and addon unemployment benefits temporarily reduced demand for our loan products. On the other hand, payment defaults are down dramatically! Payday, installment, line-of-credit… Lenders are sitting on piles of cash and ready to deploy it as our demographic reverts back to living paycheck to paycheck. Our continued success is a certainty IF we remain vigilant and informed regarding the very latest digital transformation
to MOIP [Money Over Internet Protocol].
If a borrower claims they cannot pay because their hours have been reduced, their employer has ceased operations… as a result of Covid, ASK FOR PROOF. Don’t discuss ANY options until you verify their claims are legitimate.
- Types of proof
- Letter from employer
- Run the borrower through your Instant Bank Verification and/or your Instant Wage Verification vendor to review employer deposits and other outstanding expenditures such as gaming, subscriptions to streaming services, your competition, etc.
- Proof they filed for unemployment
- Call their employer to verify the business is closed, etc.
- Call their Manager/Supervisor to confirm they are no longer employed/open for commerce. Include notes regarding who you spoke to, date, time, the phone number you dialed, anecdotal information.
- After gathering your “Proof:”
- Get, at a minimum, 30% - 50% of their payment to defer the remaining balance and proceed forward.
- If your borrower cannot truly pay any portion, indicate to them you will defer one payment. This is your last resort.
- Emphasize to your borrower that future transparency and communication with you are paramount to your continuing to work with them and not harass, intimidate, impact their credit negatively…
- Ensure all communications with you stress how important their financial & health success is to “ABC Loan Company.”
