Subject: Help Us Stop Legislation That Will Put Us out of Business

MEMORANDUM

To: (INSERT BRANCH NAME) From: (INSERT YOUR NAME) Subject: Help us stop legislation that will put us out of business Date: Tuesday, January 09, 2018

Recently, legislation was introduced in the U.S. Congress to impose a limit of 36% APR on the fees and interest that may be charged for installment loans. There are three bills: 1) S. 500, introduced in the U.S. Senate by Senator Richard Durbin (D-IL), the Senate Majority Whip; 2) H.R. 1608, introduced in the U.S. House by Representative Jackie Speier (D-12-CA); and 3) H.R. 1640, also introduced in the U.S. House by Representative Maurice Hinchey (D-22-NY). Enactment of this legislation will not only restrict what installment companies may charge for our services, it could well force us out of business altogether.

Because as installment lenders we make small short-term loans, the APR calculation is not a useful way to measure a loan's true cost. Moreover, any arbitrary cap on the fees and interest will likely yield so little return that the industry may well cease to exist as a source of legitimate small loan lending.

Not only does this legislation have the potential to shut down the installment loan industry, enactment of this bill will not provide any alternative to meet our customers' need for short term credit. In a time when it is more difficult than usual for those who use installment loans to secure credit cards, unsecured bank loans, and home equity lines of credit, the availability of alternative forms of short term credit like installment loans is even more important.

As branch employees, we encourage you and your customers to communicate these concerns to your own Senators and Representatives. In this packet, you will receive:

 Sample letter text to send to your Senators and Representatives;  Sample letter text for you to provide your customers so that they can write their Senators and Representatives;  Answers to frequently asked questions when communicating with employees and customers; and  Background on how a bill becomes a law and how you can become more involved;

Additionally, in the upcoming days, you will receive posters for you to place in your branch office and push cards for you to give to out at loan closings and counter visits, explaining the issue to your customers. Greg Hampy has graciously agreed to provide the printing for our push cards to customers and the posters. When you receive the posters and push cards electronically, please contact Greg at [email protected] or at 601-898-8700 and let him know how many push cards and posters you will need for your branch.

Additionally, please take a moment to visit our website at www.nilaonline.org and write your legislators. Encourage your branch employees to access the site so that they too may contact their legislators. In the meantime, if you have any questions, please contact me directly.

Visit us on the web at www.nilaonline.org Answers to Frequently Asked Questions

Q. What is the National Installment Lenders Association—NILA?

A. The National Installment Lenders Association is comprised of installment loan companies across the United States. Our members are in 19 states and support millions of customers across the country. The mission of the Association is to ensure that the companies and customers have a voice in Washington, especially on legislation that affects the installment loan industry, our customers and our employees.

Q. Who serves on the NILA Board of Directors?

A. Francis Lee, Chairman (President & CEO, First Tower Corporation); Sandy McLean, Vice Chairman (CEO & Chairman, World Acceptance Corporation); and Phillip Holt, Treasurer & Secretary (VP of Government Affairs, Security Finance Corporation of Spartanburg).

Q. What installment loan companies are members of NILA?

A. Security Finance Corporation; World Acceptance Corporation; 1st Franklin Financial Corporation; Union Credit Corporation of LA; Continental Car Club; Southern Management Corporation; Western Shamrock Corporation; Brundage Management/Sun Loan Company; Republic Finance LLC; Cash Loans Corporation; First Tower Corporation; Heights Finance, and Royal Management Corporation.

Q. What is the legislative issue?

A. This Congress, legislation to establish a cap of 36% on the APR that may be charged for installment loans was introduced by Senator Richard Durbin (D-IL), Representative Jackie Speier (D-12-CA) and Representative Maurice Hinchey (D-22-NY).

Q. How will this legislation affect the installment loan industry?

A. The installment loan industry serves people who are trying to meet both day-to-day and unexpected expenses. Most customers are employed, but like many Americans, have little savings. Many have damaged credit histories, which further inhibits access to credit even in the best economy. Because commercial banks rarely offer small dollar (under $2,000) loans to their existing depositors-much less to non-depositors-the options for the installment loan customer are few.

When examining the effects of a 36 percent APR on the installment loan industry, it should be noted that employees already operate under tight profit margins. Legislation that forces an arbitrary interest rate cap, such as 36 percent, would have a dramatic negative effect on the individual branch. The average branch would now generate only approximately $130,000 in income on an annual basis. Under this limitation, the branch would not be able to cover its fixed expenses including: payroll, rent and utilities, credit losses, collection cost, and other administrative costs-much less make a profit.

Accordingly, the 36 percent rate cap would substantially impair-if not eliminate-the installment loan business, not to mention leave millions of deserving consumer borrowers with little to no other options.

Q. What alternatives exist for the average installment loan customer?

A. Commercial banks rarely offer small dollar ($2,000) loans to their existing depositors-much less to non- depositors. Another option may be to borrow from friends or family members, who unfortunately may be in the same position as the borrower. In Japan, artificially imposed APR caps have, in effect, wiped out much of the formal

Visit us on the web at www.nilaonline.org consumer lending industry. These borrowers have been forced to look elsewhere for credit, to loan sharks and other illegal options. This must be guarded against very carefully here in the United States.

Q. How will this legislation affect borrowers?

A. As the availability of credit continues to shrink and standards remain the same or higher, more and more borrowers are denied credit cards, unsecured bank loans, and home equity lines of credit. Yet even in the best economic times, it is vital that installment loan borrowers have access to loans. The current economic climate will only lead to increased demand. If a 36 percent APR cap is imposed, the installment loan industry may well disappear, driving small borrowers with limited credit into the arms of loan sharks and other illegal sources.

Q. Do you have a website?

A. Yes, you may learn more about the issue by visiting our website, www.nilaonline.org. Through our website, you may learn more about the issue, contact your legislator and volunteer to do more.

Q. How do I find my legislator?

A. You may conveniently find your legislator by visiting our website at www.nilaonline.org and clicking on the button “Legislator Lookup.” Click on whether you want to find your U.S. Senator or Representative, and then enter your state and zip code.

Q. What can we do to help?

A. Get involved! Write your Representative and Senators in Washington. Meet with them when they are home. They want and need to hear from you before they vote on legislation. You may also contact your state representatives and ask them to help familiarize the federal legislators from your state about the importance of this legislation to their common constituent.

Tell your customers about this legislation and encourage them to write as well. In this packet and on our website, you will find a letter for customers to readily communicate with their legislators.

Let us know of your interest and what you're doing. If you want to arrange a meeting with your Representative and Senators, contact us and we will help you arrange meetings with your legislators when they are home.

Visit us on the web at www.nilaonline.org SAMPLE LETTER FROM EMPLOYEES

(Insert Date)

The Honorable (Insert Full Name) (Insert Office Number and Name of Building) (Insert either: United States House of Representatives or U.S. Senate) Washington, DC (Insert Zip Code)

Dear Senator or Representative: As a constituent and employee in the financial services industry, I am concerned with legislation that would set arbitrary limits on the APR that may be charged for installment loans. I am particularly concerned with the effect of such legislation on my employer, who operates a highly regulated consumer installment lending company, providing small installment loans to customers across the state.

Millions of families rely on installment loans to meet their financial needs. Most are honest, hard working people who occasionally have the need for short term credit due to unforeseen financial emergencies. During the current period of unprecedented volatility in the credit markets, it is vital that these consumers maintain access to credit. As banks, thrifts and other financial institutions refuse to extend credit to our customers, it is imperative that this valuable source of credit be maintained.

Of course, installment loans not only help local families, they help the community. The majority of customers who have installment loans live within a 20 mile radius of the branch they use - and that money is poured right back into the community helping local businesses survive.

We make short-term installment loans and because these loans are intended to be paid back quickly, the APR is not an accurate measure of the loan's true cost. For example, on a $300 loan repayable in equal payments over six months with an APR of 36 percent, the total charge for interest would be less than $5.50 per month. Under this cap, it is not possible for a branch to pay even its fixed cost. Moreover, not everyone we lend money to repays the loan, meaning we have to write some loans off as expense.

Legislation that reduces our rates and forces a well-run highly regulated industry out of business will not solve our customers need for short term credit, but it could force them into a deregulated, unsupervised, uncontrolled situation. The intentional collapse of yet another industry will put thousands of people out of jobs at a time when our country is already facing the highest unemployment rate in years.

As credit availability shrinks and borrowers, particularly low and moderate income borrowers, see traditional forms of credit dry up (e.g., credit cards, unsecured bank loans, and home equity lines of credit), it is imperative that borrowers maintain access to alternative forms of short term credit, such as installment loans.

Before casting your vote on this legislation, I invite you to visit a local branch to meet our employees and our customers. It is important that you take the time to truly understand the full impact of this legislation. What may appear to be a quick simple way to stop the abusive practices by a few non-installment loan companies in the industry will actually eliminate a source of funds to a large part of the population - your constituents who have no other access to credit.

Sincerely,

Insert your name, title, and company name

Visit us on the web at www.nilaonline.org SAMPLE LETTER FROM CUSTOMERS

(Insert Date)

The Honorable (Insert Full Name) (Insert Office Number and Name of Building) (Insert either: United States House of Representatives or U.S. Senate) Washington, DC (Insert Zip Code)

Dear Senator or Representative:

I am writing to express my opposition to legislation that would set unrealistic limits on the fees for installment loans. Please oppose this legislation when it is considered by Congress.

In the current economy, it is nearly impossible for honest, hard-working people, like me, to gain access to credit cards, bank loans, or even home equity lines of credit, for those of us fortunate to own a home. When banks and other financial institutions refuse to extend credit, installment lenders are the only solution many people have when facing unexpected financial emergencies. Passage of this legislation will shut down the installment loan industry and take away one of the few sources of credit available to me and to millions of Americans.

Installment loans are one of the few solutions I can rely on when I need access to credit. The process is quick, simple, and I trust the loan office and staff who help me.

Please carefully study this legislation. When you do, I believe you will find that it restricts my ability to obtain loans. Passage of this legislation may stop a few unethical companies who prey on the financial hardships of others-but more importantly it will devastate the entire installment loan industry and take away a positive solution for American families in need of safe, well-regulated credit options.

Sincerely,

Insert first/last name

Visit us on the web at www.nilaonline.org The Legislative Process: How a Bill Becomes a Law

"All Legislative Powers herein granted shall be vested in a Congress of the United States, which shall consist of a Senate and House of Representatives." This brief sentence in the Constitution vested Congress with the power to create laws for the country, but it did not provide a specific procedure for enacting legislation. The rules by which legislation may be introduced, debated, and voted on are outlined in the respective procedural rules of the Senate and the House of Representatives.

The process begins when a Representative or Senator introduces a bill, which is actually a very simple process. In the House, a bill is dropped into the “hopper”—a small wooden box located on the House floor—after which the bill is assigned a number, entered into the Journal, and printed in the Congressional Record. The process in the Senate can be a little more formal, where it is more common for members to introduce a piece of legislation with a floor speech rather than merely turning it in to the clerk’s desk.

Once a bill has been introduced, it is referred to the committee that has jurisdiction over the general issue(s) covered by the bill. There are approximately 19 standing committees in the House and 16 standing committees in the Senate. At this stage, committees will hold public hearings, debate the issue(s), and conduct a mark-up session, during which members of the committee will literally go through the text of the proposed legislation and mark it up, offering amendments, adding or deleting text from the bill. Following mark-up, if a majority of the committee votes to send the bill to the floor, it is then put on the calendar and rules for debate are written.

In the House, the bill is referred to the Rules Committee, which determines how long the bill will be debated, how many amendments can be offered, and who can offer them. The entire House then votes on the rules of debate. If the rules are agreed upon, then the bill comes to the floor for debate. If the House cannot come to agreement on the proposed rules, the bill is returned to the Rules Committee for reconsideration, and the process repeats until a set of rules is passed and debate can begin.

The Senate’s procedure is a little different, because the Senate has a standing rule—the rule of unlimited debate— which guarantees every Senator the opportunity to express his or her opinion about a bill. To keep this rule from delaying the process unnecessarily, the leadership in the Senate will often attempt to obtain a Unanimous Consent Agreement, which will limit debate to the amount of time specified, as well as limit the number of amendments that can be proposed.

The bill must be passed by both the House and the Senate, and often the versions of the bill passed by each chamber are different. When this is the case, the legislation is referred to a conference committee that will attempt to reconcile the two bills into a single version that both chambers will approve. Once the conference committee has issued its report, both chambers will vote on the final version of the bill, and, if it is passed by both the House and Senate, it is then sent to the President, who can either sign it into law or veto it.

The process of creating legislation is complex, and there are many obstacles a bill must overcome in order to be enacted into law. Only a small portion of the bills introduced will make it out of committee and an even smaller number will be signed into law. Typically, several thousand pieces of legislation are introduced over the course of a two-year congressional session, and of those only a few hundred are ultimately signed into law.

Visit us on the web at www.nilaonline.org Tips for Meeting with Your Legislator or Legislative Staff

A face-to-face meeting helps you connect with your legislator and his or her staff on a personal level and can be important in building relationships for installment lenders. Elected officials typically enjoy meeting with their constituents, but many people compete for their time. When meeting with your elected official, you should remember the following:

. Be Flexible When scheduling an appointment, provide as much advance notice as possible and try to be flexible about dates and times. Your legislator will likely be able to spend more time with you if you schedule the meeting at his or her district office when Congress or the legislature is not in session. Be ready to estimate how much time your meeting will take and let the scheduler know who will be with you and the subject you wish to discuss.

. Be Prompt and Professional Once you have made the appointment, be sure to keep it. It is wise to confirm your appointment a day or two in advance and plan to arrive a few minutes early. Be sure to stick to the topic at hand, keep your comments and questions brief and allow time for your Member of Congress to provide you with feedback. Dress professionally and make sure you are prepared to deliver your message persuasively.

. Respect the Legislator’s Schedule Remember that your legislator’s time is limited, and you are there to discuss important issues, not attend a social event. Know in advance how long the legislator will be able to speak with you and make certain the meeting does not exceed the allotted time. Be sure to stick to your topic, keep your comments and questions brief, and allow time for your legislator to ask questions and provide you with feedback.

. Be Organized for the Meeting Know your issue and the facts behind it thoroughly before you reach the meeting. If several people will be attending, designate one individual to act as spokesperson for the group and make sure you are all agreed on the message you are there to deliver. When you arrive at the meeting, introduce all of the attendees and allow the spokesperson to explain why you have requested the meeting. Be as specific as possible to help your legislator better understand the big picture.

. Clearly State Your Position and Seek Feedback Explain specific reasons you support or oppose the issue, including the impact of the issue on your company, community, colleagues and industry. Stick to the issue at hand; bringing up other topics will lessen the force of your message. Ask your legislator’s position on the issue, but don’t try to force him or her to commit to a position. Request that you be kept updated on the issue and be sure to provide your contact information.

. Avoid Arguing While you are entitled to disagree with your elected officials, remember that you are not just there to win: You are there to build a positive relationship. Becoming argumentative will not help. Even if you are unable to persuade your legislator to your point of view, it is always best to leave on friendly terms so that you will be welcome another time. The fact that you took the time to meet with the legislator personally will still have an impact on the strength of his or her position, even if it is different than yours.

. Provide Leave-Behind Information Whenever possible, leave appropriate documentation that supports your position with the legislator. Such leave-behind information will help the legislator remember your views and allow him or her to refer back to them after the meeting is over.

. Follow Up with a Personal Letter Be sure to send a thank-you letter after the meeting, regardless of whether you were able to reach an

Visit us on the web at www.nilaonline.org agreement. A thank you letter demonstrates that you appreciate the value of your elected official’s time and allows you to reiterate your position and underscore your concerns.

Visit us on the web at www.nilaonline.org Your Involvement is Important: Speak Up and Be Heard!

The current political environment is an interesting one for the financial services industry, particularly the installment loan industry. Below are some ways you can become more involved and ensure your voice is heard on the policy issues that matter to your company, your colleagues, and your community.

1. Register to vote. Make certain that your registration is up-to-date with your current address.

2. Vote in every election. Federal, state, local, municipal, school board, special elections, primaries, etc.

3. Make a contribution. Candidates for political office have to raise anywhere from $10,000–$33,000,000 to run a successful campaign. Unless a candidate is self-financed, which most are not, contributions may only come from two sources: individuals and political action committees.

4. Volunteer your time. Candidates for elected office cannot succeed by themselves. They rely on volunteers to help in their campaign office or with door-to-door communications. Simply contact a candidate’s campaign office in your locality and tell them you’d like to volunteer. They’ll appreciate the help.

5. Write a letter to the editor of your local newspaper. Should you need assistance, contact your company home office who will help you with the content and placement of your letter.

6. Send an email or a letter to your elected representative. The National Installment Lenders Association—NILA—makes it easy for you to learn about the important policy issues that affect our company. Simply visit our website at www.nilaonline.org to learn more.

7. Learn more about your elected representatives. Do you know who your elected officials are and what positions they hold on key issues? These are important questions and are critical to your involvement in the legislative process. Through the NILA website, you can locate your Representative and Senators and learn more about the policy issues they support.

8. Attend public hearings and town hall meetings and make your presence known. The next time you receive a notice about a public hearing or town hall meeting in your community, take the time to attend. At the conclusion of the program, introduce yourself to the speaker(s).

9. Speak up in public. The people you meet in town hall meetings may have misconceptions about the installment loan industry. Be sure to seize the moment to educate them on our business.

10. Offer up your ideas. Good ideas and relevant information are necessary to solving the challenges that the installment loan industry —and our company—face every day. Who better to offer those ideas than those who really know the ins and outs of our businesses: You! Send your suggestions to NILA through our website at www.nilaonline.org.

Visit us on the web at www.nilaonline.org