Building and maintaining relationships with banks for MSB’s and payday loan companies is challenging to say the least! Banking reform for the payday loan industry is likely on the way. There are only a handful of financial institutions in the country that are openly working with payday loan companies, check cashers and MSB’s.
“There are very smart bankers that have looked at this in different states, and I think before long, the light bulb will come on,” said the head of the banking industry association. “Banks across this country are standing up.”
But until there’s more guidance from the federal government on banking practices and more of a guarantee that financial institutions won’t be subjected to extreme audits by policy setting examiners, many will still remain too cautious to allow payday loan companies to open accounts or get loans he said.
So for now, payday loan companies should seek out small- to medium-sized financial institutions with total assets of between $150 million and $1 billion, as they’re more likely to work with the industry than larger banks.
The head of the banking industry offered several suggestions that could help companies obtain bank services: document everything, and be prepared to alter some of your business practices to satisfy concerns from banks. Specify a company compliance officer. Develop a formal compliance program. Implement employee training and DOCUMENT they completed it. That kind of transparency and flexibility can go a long way toward reassuring bankers that working with payday loan companies is safe, he said.
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