A Trump donor’s company got a 3 percent federal pandemic loan. It sells title loans at a 350 percent annual rate.
Wellshire Financial Services got the money despite rules meant to prevent most lenders from qualifying for the Main Street program
By Todd C. Frankel November 23, 2020 at 6:00 a.m. EST
A company owned by a major donor to President Trump that operates auto-title loan stores with names such as LoanStar and Moneymax secured a $25 million low-interest loan from a government pandemic aid program, using what consumer advocates describe as a loophole to a rule designed to prevent most lenders from getting this federal help.
The cash infusion to Wellshire Financial Services — part of a multistate title loan empire run by Atlanta businessman Rod Aycox — came from the Federal Reserve’s $600 billion Main Street Lending program for small and medium-size businesses.
Wellshire’s government-backed, five-year loan came with a 3.15 percent interest rate, Fed records show. Loans to consumers at Wellshire’s auto-title loan stores can carry a 350 percent annual rate, thanks to high fees and interest supercharging the cost of borrowing, according to corporate disclosure documents.
One of Aycox’s stores, LoanStar, which has dozens of branches in Texas, notes that someone taking out a $1,200 loan, secured by a vehicle as collateral, needs to pay back $1,589.97 within one month or potentially lose their vehicle. That works out to a 352.24 percent annual credit cost. Read HERE.
New Nonprofit Fund Offers Alternatives To ‘Predatory Loan’ Industry In Texas
The Capital Good Fund offers an alternative to payday and auto title loans, and other credit services that come with high costs and a lot of risks for borrowers. Capital Good Fund is a distinctly non-predatory lender, a Community Development Financial Institution that offers small personal loans with reasonable terms. The fund makes loans and offers financial counseling in six states now. Texas is the latest. The fund offers two different types of loans in the Lone Star State: One to help cover immigration costs between $2,000 and $20,000 with an annual percentage rate close to that of a typical credit card (15.99% to 24%). The other is a short-term crisis relief loan between $300 and $1,500 that has a 5% interest rate and a three-month deferment period. Read HERE.
Americans are falling through the safety net. The government is helping predatory lenders instead.
How the Trump administration is betraying financially vulnerable people in the pandemic.
By Emily Stewart[email protected] Aug 26, 2020, 10:00am EDT
People are facing a period of nearly unprecedented uncertainty, and a series of recent decisions from financial regulators is making it easier for those in need to be drawn into a spiral of debt that they can’t pay off. Regulators have loosened restrictions around small-dollar, high-interest loans, giving vulnerable people more access to loans that will cost them money they don’t have and allowing outfits such as payday lenders to send money to borrowers without checking whether they’ll ever be able to pay that money back. Read HERE.
Reps Calling for Payday Lender Bailout Get 6x More Money From Payday Lenders
The representatives [including reps from NC, SC, OH] seek an exemption from loan regulations so that payday lenders can receive funding from the coronavirus relief package meant to bail out small businesses.
PUBLISHED ON APR 27, 2020 5:05PM EDT
House representatives who have received substantial funding from the payday loan industry are calling on the Trump administration to loosen Small Business Administration regulations so that payday loan companies and other small nonbank lenders can receive bailout funds.
In a letter sent on Thursday to SBA Administrator Jovita Carranza and Treasury Secretary Steve Mnuchin, a bipartisan group of 28 representatives argued that the SBA “unduly narrowed” what industries would be eligible for forgivable loans under the CARES Act’s Paycheck Protection Program when it applied its pre-existing prohibition against making loans to payday lenders.
Payday lenders, which typically charge interest rates of 400% or more on an annualized basis, are among the industries that have been barred from receiving SBA loans since 1996, along with casinos, coin and stamp collectors, and multi-level marketing companies. Read HERE to find out if your representative signed this letter.