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Alabama Commissioner Chip Beeker’s Catfish Farm Loans $100k to Campaign After Receiving PPP Forgiveness

Alabama Commissioner Chip Beeker's Catfish Farm Loans $100k to Campaign After Receiving PPP Forgiveness


An Alabama utility regulator is funding his re-election campaign with a loan from his private farm, which has received millions of thousands of dollars in federal subsidies, despite the regulator’s frequent criticism of “the overreach of the federal government” in his election campaigns.

Alabama Public Service Commissioner Chris “Chip” Beeker Jr. owns the Beeker Catfish & Cattle Farm. The farm loaned $100,000 to Beeker’s campaign on May 10, 2022, according to campaign finance records from the Alabama Secretary of State.

Beeker Catfish & Cattle Farm received a $45,600 Paycheck Protection Program (PPP) loan in April 2020, and the government had forgiven $46,078 (including increased interest) as of April 27, 2021, according to ProPublica’s PPP tracker.

Beeker’s farm has also received at least $120,883 in farm subsidies since 1995, 80% of which came in the years since his first election in 2014, according to the EWG farm subsidy database.

Beeker has been a frequent critic of the federal government, including forming President Obama’s Clean Power Plan. He has made fighting the federal government a core part of his campaigns since at least 2014.

Beeker did not respond to questions from the Energy and Policy Institute (EPI) about the subsidies.

Another entity from which Beeker derives income, Alabama Catfish Feedmill LLC, had $224,797 forgiven through the PPP, as of November 5, 2020. The company does not list Beeker as an owner, but Beeker’s 2021 statement of economic interest filed with the Alabama Ethics Commission $10,000 disclosed to $49,999 of income from the company.

Other contributions to Beeker from coal interests, manufacturers with ties to Alabama Power

Beeker’s campaign has received only four non-PAC contributions since the beginning of 2019, including his farm’s $100,000 loan to the campaign. The non-PAC contributions included $10,000 from JJ Kane, an automotive auctioneer whose website listed it as a seller of used cars, trucks, utility and construction equipment from Alabama Power’s fleet; $5,000 from Alabama Coal Cooperative, which provides coal to Alabama Power’s EC Gaston plant; and $2,500 from George Clark, the President of Manufacture Alabama. Manufacture Alabama has been supportive of Alabama Power’s positions at the Alabama Public Service Commission and the utility has been a funder of Manufacture Alabama, including as a “diamond sponsor” of the group’s annual meeting last year (the highest available level).

Beeker is currently running for reelection and will face Republican challengers Robin Litaker and Robert McCollum in the May 24, 2022, primary. No Democrats have qualified for the race.

Phone records: Beeker rarely uses office phone, government cell phone

Phone records from the year 2020, obtained by EPI via a public records request, showed that Beeker rarely used his office phone and his state-issued cell phone. Beeker made just one nine-minute phone call from his office that year, on August 24. The COVID-19 pandemic limited office use for many government agencies for much of 2020, but according to the records, Beeker’s government cell phone also averaged just under nine minutes of use per month and also averaged less than one text message sent per month.

Beeker did not respond to questions from EPI about how he communicated with key stakeholders and his constituents other than by means of his voice calls on his office phone or government cell phone, or text messages on that cell phone.

Each Commissioner makes a salary of $103,490 per year.

Beeker’s solar lease proposal rejected by Alabama Ethics Commission

Beeker asked for an opinion from the Alabama Ethics Commission regarding a potential solar lease on his farm, despite his stated preference for coal and gas. The Ethics Commission voted 3-2 in September 2016 to stop Beeker from entering into an agreement with a solar company that would have paid him $225,500 per year and $5.6 million over 25 years. The solar company was hoping to sell power to Alabama Power, an entity regulated by the Public Service Commission. Beeker’s lawyer at the time said he was disappointed in the ruling.

Shortly after Beeker’s election in 2014, his son, Chris Beeker III, took a job with Steele and Associates, a utility staffing company which lists Southern Company as a client, as first reported by Eddie Curran, a critic of Beeker and Alabama Power’s influence over the PSC. Chris Beeker III was appointed in November 2017 to be the Alabama Rural Development Director for the US Department of Agriculture under the Trump Administration.

Picture source: YouTube



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A Small Business Owner’s Guide to Business Acquisition Loans

A Small Business Owner's Guide to Business Acquisition Loans


Image source: Getty Images

Interested in expanding your business and buying another? A business acquisition loan can help you do that. Here’s what you need to know before you start the process.

There are many paths to becoming a business owner. While coming up with a brilliant idea and building a business around it is a popular choice, it’s just one option.

Another is buying an existing business.

Maybe your business doesn’t have the juice to grow at the rate you’d like, and you want to fix that. You can buy a company that already has the inventory, market share, or infrastructure to help you get where you want to go. Or, maybe you don’t want to come up with an idea and prefer to skip right to business ownership, buying something that’s already up and running.

If you don’t have the funds to do it, getting business acquisition financing can help.

Here’s what you need to know about these loans and the process of getting one.

Overview: What is a business acquisition loan?

A business acquisition loan is a loan to help you acquire another business. Simple, right?

This type of loan is used by business owners who want to buy an additional business or franchise. If your current business is a partnership and you want to buy them out, so you are the sole owner, you can also use an acquisition loan for this purpose.

There are a couple of different types of loans you can explore, depending on your situation and needs:

  • SBA loans: For many small business owners, especially those who often can’t secure traditional funding, SBA (Small Business Administration) loans can be a good option. The SBA works with lenders across the country to offer financing. Explore the 7(a) and the 504 loan programs; both are SBA business acquisition loans.
  • Term loans: If you have a good credit score and financial standing, you might be a candidate for a term loan. These are usually through traditional lenders (though many online lenders now offer acquisition and business installment loans) and have more attractive payment terms and fixed rates.
  • Equipment financing: If your business owns a lot of valuable equipment, you may be able to put that forward as collateral to secure a loan. In some instances, using this method helps expedite the loan process. However, if you were to default, the lender will own your equipment and take it away.
  • Peer-to-peer lending: Another option is peer-to-peer lending (P2P). Here, funding is provided not through financial institutions but groups of people. If you struggle to qualify for traditional financing, it might be an option.

3 benefits of a business acquisition loan

Every type of business loan has its advantages, and acquisition loans are no different. For the right person, these loans can help make their dreams of business ownership a reality.

Here are a few of the benefits you’ll want to consider as you continue to explore business acquisition loans.

Skip the start-up phase

Ask any business owner, and many of them will tell you the startup phase is among the most stressful periods of their lives. A lot of blood, sweat, and tears go into getting a business off the ground. Aspiring entrepreneurs who don’t have the time or ideas to build something from the ground up can move right into ownership with an established business and focus on growth.

Expand faster

You might know that expanding your business is the best move for growth. But it can take longer than you want to raise the funds needed to take the next step on your own. With a business acquisition loan, you can move to that next phase within months, not years.

get more time

Many of these loans have extended terms for repayment, set up through installment plans. That means you can secure the funding you need to help your plans, but you have a longer horizon (in many cases, 10 years or longer) to pay back the loan. That can help take some of the pressure off as you can focus on growth without having a significant payment hanging over your head.

How to obtain a business acquisition loan

It shouldn’t come as a huge surprise, but getting a business purchase loan is a somewhat lengthier and more involved process compared to other types of financing.

The biggest reason for this is because lenders need to evaluate more than just you; they also need to assess the business you’re planning on buying. That makes sense when you think about it because lenders aren’t going to want to give you financing for a business that is on shaky ground or has a higher risk of failure.

If you, or the business, don’t meet those requirements set by the business acquisition lender, you’ll have a much more difficult time obtaining a loan.

With that in mind, here are the basic steps you’ll need to follow as you go through the process.

1. Evaluate your situation

Before you jump in to any business loan, you need to take a close look at your finances and the business you want to buy. Any lender you work with will generally want some combination of the following information:

  • Credit stories: You’ll need to provide your personal credit history and the credit history for the business.
  • Your professional business experience: Lenders usually won’t approve loans to people with little or no business history. Even if this is your first time owning a business, you’ll want to demonstrate you have the relevant experience.
  • Financial documents: You’ll need an assortment of financial information, including profit and loss statements, valuations, and bank statements.
  • Your business plan: Prepare a business plan that highlights your business goals and maximizes your chances of getting funding.
  • Business valuations: Lenders pay a lot of attention to this number. Have a clear picture of the business’ valuation as it stands now and its projected growth over the next three to five years.

2. Review the requirements

Depending on the type of loan you want and the lender you use, there will be different requirements. SBA loan requirements may be less stringent than those of your local bank or credit union. Depending on the loan, you might have to meet shorter payment periods or provide collateral to obtain it.

Just know that whatever the requirements may be, you will have to meet them. There is rarely any wiggle room with these types of loans.

3. Get your paperwork in order

Paperwork is essential to securing any loan, so ensure you have it set before you begin the application process. Otherwise, you could force a delay by scrambling to dig up old documents.

Here are a few of the documents you can expect your lender will request:

  • Personal and business tax returns
  • Personal and business bank statements
  • A signed letter of intent
  • Business financial statements
  • Business debt schedule
  • Business projections
  • Legal business documents, including contracts, ownership agreements, and licenses

4. Pick the loan that fits your needs

If you’ve completed the steps above, this part is going to be a breeze. Once you take a good hard look at your finances and that of the business, get all your documents, and develop a business plan, you’ll be prepared to look for a lender that will meet your needs.

It’s never a bad idea to start with your current business banker. Since you will have to meet with your lender as part of the application process, having an established relationship can help. Plus, if you’re exploring the SBA route, many banks are approved SBA lenders.

5. Submit your application

Finally, it’s time to submit your application. Once it’s in, it’s just like they say — the waiting is the hardest part. A business acquisition loan will likely take a few weeks to process. It’s not something that has the quick turnaround like you might find with small-dollar microloans funding.

FAQ’s

  • The answer depends on the lender. Some lenders, such as more traditional financial institutions, tend to require it as part of the loan. However, in many cases, the business you are buying can act as a form of collateral, especially if it has real estate or equipment.

    Online lenders tend to have more options for unsecured loans, and some SBA loans don’t have a collateral requirement.

  • While every lender isn’t the same, there are a few essential requirements most will have. You’ll need to be aware of these and prepare for them as you go through the application process.

    Qualifications usually include the following:

    • A credit score above 600 (the higher, the better)
    • strong business credit
    • Collateral for the loan
    • A certain number of years of business experience
    • Demonstrated cash flow
    • A business plan
  • C’est possible. You might have to explore alternative funding methods, such as P2P or online lenders. Be aware, though, that you might get hit with more unfavorable terms, so do the calculations to determine if the numbers work.

    In the meantime, speak with your current banker about your credit score and see what you can do to help raise it. Even improving it by a few points might make the difference.

Ready to become a business owner?

It might be the perfect time for you, and a business acquisition loan may be able to help. Before you jump in, evaluate your finances and the business you’re interested in, and make sure you explore all of your options.



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How to Get Your PPP Loan Forgiven and Apply for a Second One

How to Get Your PPP Loan Forgiven and Apply for a Second One


PPP loans may be the life raft your business needs. Learn how to get your first loan forgiven so you can work on getting the next one.

No question, 2020 was hell on small businesses. Retail businesses in many areas couldn’t stay open. Employees couldn’t work if they became afflicted with COVID-19 or had increased risk from the virus. Banks was just as scared as everyone else, and finding a small business loan became impossible.

Midway through the year, the Paycheck Protection Program (PPP) was introduced to offer relief to small businesses through SBA small business loans. My company took advantage of the program and kept high-risk employees on the payroll and kept their insurance going, even when they couldn’t come into work.

We applied for and received loan forgiveness on the loan as soon as we were able, and just this week, we got an email from our banker offering us the chance to participate in the second round of PPP loans that’s happening now.

Let’s take a look at how you can get your PPP loan forgiven and if you’ll qualify for the second round.

Overview: What is a PPP loan?

PPP loans are intended to help small businesses keep payroll going even during the worst of the pandemic. You must use 60% or more of the loan funds on payroll, and the remainder must be used on crucial expenses such as rent and utilities.

The program runs through the Small Business Administration’s (SBA) existing loan origination process where private banks originate the loans, which are then guaranteed by the government.

The loans are available to small businesses and independent contractors.

How PPP loan forgiveness works

If you did a First Draw PPP loan last year and haven’t had it forgiven yet, now is the time to apply for PPP forgiveness. The longer you wait, the more chance you will owe interest or your loan won’t be forgiven. Here are the PPP forgiveness requirements.

1. Gather information from your accounting software

The SBA requires you to submit specific information for the loan to be fully forgiven. At least 60% of loan funds have to be used on payroll, and the remainder can only be used on mortgage interest, rent, utilities, or uninsured damage from civil unrest.

Most accounting software programs have added special reports you can run to get all the information you need. Look for PPP reports. If you can’t find any, gather the following information for the 24 weeks after you received the loan funds:

  • Total labor and burden costs (gather all IRS Form 941s for proof)
  • Employee count at loan origination and after 24 weeks
  • Total mortgage interest, rent, and utilities expenses for the 24-week period

2. Complete loan forgiveness application

Your bank should be able to help you with the loan forgiveness process. Mine had a software program that integrated with the bank server where I could enter necessary info. If your bank doesn’t assist you, check the SBA loan forgiveness website and use the most recent application.

The app shouldn’t take long to complete, and if you follow the PPP loan forgiveness rules, the total amount will be forgiven. I took 17 minutes to complete the app, and my bank submitted it to the SBA the same day.

3. Don’t pay taxes on the forgiven amount

The Coronavirus Response and Relief Supplemental Appropriations Act of 2021 (say that three times fast), which started the second round of PPP loans, also changed the rules regarding taxation of PPP loan forgiveness.

Traditionally, any loan forgiven must be reported as income on your business’s balance sheet. When the CARES Act was passed last year to start the PPP, the act required any expenses paid by the loan to be left off the income statement or for the loan forgiveness to be reported as income.

The new act allows businesses to report the expenses and reduce taxable income but excludes businesses from having to report the loan forgiveness as income.

I already had a PPP-related headache when renewing a line of credit my business has. I took the PPP loan off the balance sheet on the interim statement when it was forgiven, but originally made the journal entry to debit the loan and credit other income.

Now that we know loan forgiveness won’t be treated as other income, the balance sheet doesn’t balance. That makes the bank nervous. We don’t know exactly how to account for loan forgiveness yet, and you’ll need to lean heavily on your CPA come tax time to make sure you do it all correctly.

Note: if you pay interest on PPP loan funds because you don’t have enough payroll to use it on, you can expense the interest like you would on a normal loan.

3 Second Draw PPP loan requirements

Here are the requirements to get a Second Draw PPP loan.

1. Received a First Draw loan

If you didn’t get a First Draw loan, now is the time. The process is the same as it is for Second Draw loans with fewer requirements (you don’t need to prove the drop in sales). The sooner you receive a First Draw loan, the sooner you can have it forgiven and try to get into the Second Draw round.

2. Have no more than 300 employees

The SBA has a convoluted industry-specific way to judge if businesses are small for its normal loans, but it has simplified that to limiting loans to businesses with fewer than 300 employees for the PPP.

3. Had a 25% reduction in sales

Congress wants to make sure that if you participated in the first round, you only participate in the second if you really need to. You can only qualify for the loan if any of your 2020 quarters had total sales of 25% less than the same quarter in 2019.

So if you did $450,000 of sales in Q2 2020 and $600,000 in Q2 2019, you would qualify. Here’s the calculation: (($600,000-$450,000)/$600,000 = 25%).

If you haven’t up to now, keep up with the news and bookmark this article to read it again every month or so. I have a feeling the 25% amount will come down at some point. One of my banker contacts told me this week that the majority of his clients had a max sales drop between 17%-22%. If the same is true around the country, Congress will eventually open up the program to more businesses.

This requirement is the same if you’re working for yourself as an independent contractor. Many independent contractors do minimal accounting during the year (just enough to pay estimated taxes) and count on a CPA or bookkeeper to figure everything out at year-end. It’s probably worth your time to figure out exactly how much you did in each of the last eight quarters to qualify if you can.

How to apply for a PPP (Paycheck Protection Program) loan

Getting a PPP loan is easier than a normal loan. Here’s what you should do.

1. Visit your normal banker

If your bank does SBA loans, they probably can help you with a PPP loan. If they can’t, consider switching banks. Your banker, or your bank’s SBA department, should be experts on the program and able to walk you through the process painlessly.

2. Gather documents

The loan amount is based on gross wages you paid to employees in 2019 minus any wages paid to individual employees over $100,000. This is another place where good accounting software will save you a ton of time. If your software has PPP reports, you can simply print those. Otherwise, you’ll need to put together some reports on all your employees’ wages and burden costs from 2019 to use on the application.

3. Use the proceeds on the correct expenses

Follow the PPP loan forgiveness guidelines as much as you can. If you do, the PPP loan is effectively free money for your business with no tax liability.

Don’t delay, apply today

Most business owners dread interacting with the government. You have to report endless items and pay taxes for just about everything. The Paycheck Protection Program is a way you can take advantage of a government program meant to keep your business afloat during volatile times.



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Interest rates for federal student loans to increase in July


About 41 million people in the US have student loans.

About 41 million people in the US have student loans.

PA

Students headed to college need to prepare for an unexpected cost: taking out federal student loans is going to be more expensive this fall than it was last year.

The Treasury Department announced that starting July 1, interest rates for new federal student loans will increase by 1.26% percentage points, according to the National Association of Student Financial Aid Administrators.

Here’s what that means for new borrowers.

Each spring, Congress sets student loan interest rates for the following academic year based on notes from the 10-year Treasury auction that takes place in May, according to Bankrate, a financial guidance site.

Starting July 1, interest rates on federal student loans will rise significantly and will stay in effect through at least June 30, 2023, according to Forbes.

The 1.26% spike will bring rates on undergraduate student loans from 3.73% to 4.99% — which translates to a 34% increase, according to the current rates shared by the Department of Education.

For graduate students, interest rates on unsubsidized loans will rise from 5.28% to 6.54% – or about a 24% increase.

Rates on the PLUS loans — designed for parents of undergraduate students and graduate and professional students — will go from 6.28% to 7.54%, about a 20% increase.

“It will represent a pretty notable increase from one year to the next,” Greg McBride, chief financial analyst for Bankrate, told CBS news.

This is the biggest percentage jump on student loan interest rates since 2013, according to the Washington Post.

Bankrate explained that federal student loans are fixed — “meaning that the rate will not fluctuate for the life of the loan.” It also means the new rates only apply to loans taken out to pay for the 2022-2023 academic year and don’t impact existing federal loans. Private student loans will also not be impacted by this change since rates vary from lender to lender.

New student borrowers won’t feel the effect of the spike in interest rates immediately as the pause on student loan repayments fixed interest rates at 0% until August 31.

The spike also comes as millions of student borrowers await a decision from President Joe Biden on student debt cancellation.

In an April 25 news briefing, White House press secretary Jen Psaki said the president will make a decision before the end of the current pause on student loan payments.

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Cassandre Coyer is a McClatchy National Real-Time Reporter covering the southeast while based in Washington DC She’s an alumna of Emerson College in Boston and joined McClatchy in 2022. Previously, she’s written for The Christian Science Monitor, RVA Mag, The Untitled Magazine, and more.

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5 ways to get a good loan if you have bad credit

5 ways to get a good loan if you have bad credit


There are many reasons why a person may need to take out a loan. Whether it’s for a car, a house, or even to pay off debt, loans can be extremely helpful. However, to get reasonable rates, one should possess a few essential qualities.

One important quality required to take out a loan is a good credit score. It will give you the best interest rates and terms possible. Unfortunately, maintaining a high credit score can be difficult for some.

What can you do if you have bad credit and need to take out a loan?

Choose The Lender Carefully

Bad credit can feel like a weight around your neck, especially when taking out a loan. You may feel like there’s no way a lender will ever work with you, but you’re wrong.

If you know where to look, you can find lenders willing to work with people with bad credit. Loans for poor credit with CreditNinja are a great way to get the money you need without worrying about your credit score.

They’re more lenient and welcoming to those with poor credit, and they’re also more flexible when it comes to repayment terms. And that’s what’s most important: finding a lender who is willing to work with you and help you pay what you need, whether it’s for a major home renovation, a new car, or to consolidate your debts.

Show That You Have A Steady Source of Income

Even with a poor credit score, you can get approved for loans. The key is to show the lender that you can make repayments on time despite your credit history. While the rates may not be as favorable, you can still get the loan you need.

There are a few things you can do to show lenders that you have a consistent source of income. For example, you can provide bank statements or pay stubs to show a steady income.

Doing this will put the lender’s mind at ease and increase your chances of getting a good loan even with bad credit.

Look for A Credit Union

Credit unions are member-owned financial institutions and have a vested interest in their members’ success. As a result, they often offer loans to people with bad credit at more reasonable interest rates than banks.

They’re more flexible than traditional banks regarding credit requirements, so you may have a better chance of qualifying for a loan from a credit union. Plus, not-for-profit status means they’re exempt from federal and state taxes, offering higher interest rates on savings accounts and lower rates on loans.

Bad credit borrowers could undoubtedly benefit from turning to a credit union for a loan instead of a bank.

Get a Cosigner

You’re not necessarily out of luck if you have bad credit when getting a loan. Having a co-signer can help increase your chances of loan approval and may even help you get a better interest rate. That person’s good credit will be used to help offset your bad credit.

Just make sure you choose someone you trust and is financially stable because if you default on the loan, they will be responsible for paying it back. Also, have a mutual agreement in place so that there are no surprises down the road and no misunderstandings, thus keeping your relationship healthy and strong.

Agree to A Shorter Loan Term

Bad credit borrowers may get a better rate by choosing a shorter loan term or repayment period. Why? Because lenders perceive bad credit borrowers to be a higher risk, they compensate for this by charging higher rates.

A loan term shorter means that the borrower will have to pay back the loan more quickly, perceived as less risky by lenders. A shorter repayment period also means that the borrower will make fewer payments, again considered less risky.

And because the repayment period is shorter, you have to work hard not to miss any payments. Or else, you could end up in even more debt, and your credit score will plummet more than it already has.

Conclusion

Got bad credit and need urgent financial assistance? The good news is that there are plenty of financial options available for people with bad credit. You don’t have to let your bad credit history hold you back from getting the financial help you need.

There’s always a solution for people with bad credit who need financial assistance. First, you have to know where to look and then be willing to put in the extra effort. Consider the tips outlined in this post, and you’ll be on your way to getting the financial assistance you need in no time.



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Keep Financial raises $9M led by A16Z to help employers offer forgivable loans as a retention tool – TechCrunch

Keep Financial raises $9M led by A16Z to help employers offer forgivable loans as a retention tool – TechCrunch


Employee churn is one of the biggest challenges facing organizations working in competitive environments. Today a startup is launching with a new product to add to the artillery of tools that HR people are using to combat that. Keep Financial is building a platform to help employers provide retention bonuses in the form of forgivable loans — forgiving the loan typically based on them staying at the company for an agreed length of time — and alongside its launch the startup is announcing $9 million in funding.

The seed round is being led by Andreessen Horowitz, with Launchpad Capital, Thomvest Ventures, Cambrian Ventures, and Worklife Ventures also participating. Keep was founded only four months ago, and it has yet to release any product, let alone sign up any customers. It got on A16Z’s radar however in part because it was co-founded by a pair of entrepreneurs with a strong track record in fintech, an area it’s been very active in backing: Rob Frohwein and Kathryn Petralia previously co-founded Kabbage, a trailblazer in the world of AI-powered small business loans, which was acquired by Amex in 2020 for $850 million. (And technically Petralia has not quite left but will be doing so very soon, I understand.)

(Note: A16Z did not back Kabbage but it was most definitely on its fintech radar — see here, here and here — and even as a large part of the firm focus on web3, crypto and other decentralized concepts, it’s still placing bets elsewhere too .)

The concept of forgivable loans has been around for years, and beyond being used as a retention tool, they really came into focus during Covid-19 as a government-backed funding mechanism for companies facing challenges making payroll and other financial hardships during the pandemic. In the world of employee retention, they have been used not just to get hires to stay with companies for longer — if they meet the terms that have been agreed, the loan is erased; if they leave before then, they must pay it back as you might a loan — but also tied to certain performance targets.

The key innovation with Keep — which, as its name implies, is focused initially at least on the retention aspects — is that it has transformed the concept into more easily provisioned service, part of the bigger fintech wave of loans as a service. With the market relatively untapped, Keep believes that it could ultimately increase the amount that employers provide in retention and compensation across the board.

“There was $8.9 billion awarded in compensation in the US last year, but less than 2% of that was in the form of retention bonuses,” Frohwein said in an interview. Big parts come in the form of options and other stock-related compensation, but as he noted, the structure of that is often very abstract and doesn’t make sense to a lot of employees and at the end of the day, still doesn’ t really tie them into any sense of commitment to staying at a company. “I believe a company like Keep could change the face of compensation. We believe we could grow that 2% to 10%.”

Doing the math, that works out to an $890 million opportunity.

Previously, Frohwein said, companies that might have considered forgivable loans a retention tool would have constructed them and managed them internally. Handing over that process to third party (like Keep) not only opens up the concept to a much wider range of business sizes — SMBs being a key area of ​​interest for these two founders — but it also adds significantly more flexibility into how the loans get provisioned, and what might be constructed around it.

As Keep envisions it, a portion of its customers, typically the larger ones, will still front the money for those loans themselves; others will lean on Keep as a loans provider. Keep itself is raising this seed as equity but is also securing some debt funding that will be used to loan out money.

Keep will initially make money itself based on provisioning and managing those loans: 2.75% of the loan amount, Frohwein told me. There is no interest on the money unless an employee leaves before the end of the agreed term, and does not pay back the full sum (or agreed proportion) within 60 days of that. That subsequent interest, he added, will be a “simple interest payback schedule” that will typically be lower than what you might get from a bank.

Around this, over time Keep plans to add in more services around the loan, Frohwein said. This could include payment cards, advice and services for mortgages or car financing, or investing, or other potential areas where bonuses are often applied by their recipients.

Anish Acharya, a general partner at A16Z, led the investment for the firm.



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Mistakes Parents Make When Choosing A Student Loan

Mistakes Parents Make When Choosing A Student Loan


Parents start worrying about how to finance their child’s college education in the spring. Their child has received one or more offers of college admission and has chosen a college. Now, they need to figure out how to pay for it.

But, parents who don’t have any recent experience paying for college often make several mistakes.

These are some of the most common mistakes parents make.

Failing to Consider Financial Fit

The student chooses a college without knowing whether their parents have enough money to pay for it. They want to go to the college with the best reputation, which may also be the most expensive college. They don’t consider whether the college is affordable.

This is like buying a Lexus when all you can afford is a Yaris.

Families need to consider financial fit in addition to academic fit, social fit and environmental fit. The child’s dream college isn’t always a college that fits the parents’ budget. Just because you want something doesn’t mean you can afford to pay for it.

The net price is one metric of financial fit. The college’s net price is the difference between the college’s cost of attendance and the gift aid awarded to the student. Total college costs include housing, meals, books, supplies, equipment, transportation and miscellaneous personal expenses in addition to tuition and fees. Gift aid includes grants, scholarships and other money that does not need to be repaid.

You can estimate the four-year net price by multiplying the one-year net price by four, adding in a 10% buffer for inflation, and adjusting the result if the college practices front-loading of grants. (More than half of colleges practice front-loading of grants.)

Compare the four-year net price with total family resources available to pay for college, including college savings, contributions from income and a reasonable amount of student loan debt. If the net price is more than total family resources, the college is unaffordable. If the child enrolls at this college, they, and their parents, will have to borrow an unreasonable amount of student loan debt.

Failing to consider financial fit can lead to over-borrowing, where the student graduates with more student loan debt than they can afford to repay. Parents too may sacrifice their financial future by piling on parent loans.

Choosing Too Expensive a College

It is shocking how often parents think that $50,000 in student loan debt for one year of college is reasonable and affordable. That’s too much debt for an entire education program, let alone for just one year. Borrowing $50,000 per year will yield more than $200,000 in student loan debt by the time the child graduates from college.

Sometimes, the prospect of borrowing that much debt just doesn’t seem to faze the parents, even as they say that they can’t afford to contribute much to help their child pay for college.

They need a reality check. They need to consider how the student loan debt will affect their child after they graduate from college, if they graduate from college. They need to hesitate and think twice before mortgaging their child’s financial future.

If total student loan debt at graduation is less than the student’s annual starting salary, they can afford to repay their student loans in ten years or less. Otherwise, they will struggle to make the student loan payments. They will need an extended or income-driven repayment plan. These repayment plans reduce the monthly student loan payments by increasing the repayment term to 20, 25 or even 30 years. It will take them at least half the time from graduation to retirement to repay the student loan debt, if not longer.

The average starting salary for a Bachelor’s degree is about $50,000. Depending on the academic major, it can be higher or lower. Arts and humanities majors tend to earn less, while science, mathematics, engineering and healthcare tend to earn more. Use the College Scorecard website to look up the median earnings 10 years after graduation from each college. Don’t borrow more than half this figure.

Instead of enrolling in a high-cost private college, the student should consider enrolling in an in-state public college, which will cost a quarter to a third the cost of a private college, even if they get no financial aid.

Choosing a Student Loan Too Quickly

Parents often feel time pressure to find a student loan quickly. They want to find a fixed-rate student loan before interest rates rise too much.

The time pressure sometimes causes them to overlook some of their lowest-cost options. Don’t get locked into a loan before you learn about the interest rates on federal student loans and federal parent loans.

For example, federal student loans and federal parent loans have a fixed interest rate for the academic year that is set on July 1, based on the last 10-year Treasury Note auction in May.

If the family rushes to choose a private student loan soon after the child has chosen a college, they may miss out on some of the lowest-cost student loans. Federal student loans are often less expensive than private student loans, and provide more flexible repayment terms.

Don’t let time pressure force you into a hasty decision.

Failing to Shop Around for the Lowest-Cost Loan

The loan with the lowest advertised interest rate is not necessarily the best loan for you.

Your actual interest rate may be much higher. You have to apply for each loan to learn the interest rate you will actually pay.

The interest rates on a private student loan are based on the credit scores of the borrower and co-signer. A better credit score yields a lower interest rate. But, each lender has its own mapping from credit scores to interest rates. This can lead to big differences in the interest rates you are offered. Even a slight improvement in your credit score may yield a much lower interest rate, due to cliff effects in the way that lenders tier their interest rates.

Ignore all the double talk about interest rate indexes.

Lenders often tie their interest rates to a variable-rate index, such as the London Interbank Offered Rate (LIBOR) index, Secured Overnight Funding Rate (SOFR) index and Prime Lending Rate, plus a fixed margin based on the borrower’s and cosigner’s credit scores . Even fixed-rate loans are tied to a variable-rate index, but at a particular point in time. The LIBOR and SOFR indexes are lower than the Prime Lending Rate.

The choice of a particular index rate doesn’t matter much, since lenders that use a lower index tends to add higher margins to the index. They adjust the interest rate according to the spread between the two indexes.

The various indexes tend to change at the same rate when prevailing interest rates change. The only difference is that some lenders base their interest rates on a one, three or 12-month average of the index, to smooth out volatility. A longer time period for the average effectively phases in interest rate increases more slowly.

What really matters is the actual interest rate you are offered, not the index upon which it is based.

Carefully consider the difference between fixed and variable interest rates. A variable interest rate may initially be lower than the equivalent fixed interest rate. But, in a rising rate environment, a variable rate has nowhere to go but up. A variable-rate loan should be considered only if you are capable of paying off the loan in full before interest rates rise too much. Otherwise, you may regret agreeing to what is really a teaser rate.

The interest rate on a fixed-rate loan will also depend on the length of the repayment term. The lowest interest rates will often require you to agree to the shortest repayment term, as short as 5 or 7 years. Lenders will not allow you to increase the repayment term later, as their cost of funds increases with a longer repayment term. If you later choose to refinance the loan to get a longer repayment term, you may have to pay a higher interest rate then than you might have received now.

Loan costs include not just the interest rate, but also the fees and discounts. Fees are like up-front interest that increase the cost of the loan. You pay the fees even if you decide to pay off the loan early. The fees on the Federal Parent PLUS Loan, slightly more than 4%, is about the same as a 1% higher interest rate with no fees on a 10-year repayment term.

For example, the new fixed interest rates on federal relative loans for 2022-23 are likely to be around 7.5% plus about a 4% fee. (The interest rates and fees on federal student loans are lower.) The equivalent no-fee interest rate is about 8.5%. Parents who have excellent credit might qualify for a lower fixed rate on a private student loan. But, a federal parent loan may be less expensive for many families. So, don’t sign up for a private loan before you’ve explored all of your options. Use a student loan calculator to compare the monthly loan payments and the total payments over the repayment term.

When considering the impact of student loan discounts, focus on just the discounts that you are likely to qualify for. Many lenders offer a 0.25% or 0.50% interest rate reduction if you agree to make the payments by automatically transferring the money from your bank account. But, some borrowers feel uneasy about AutoPay because it feels like the lender is reaching into your bank account to take the money. That really isn’t true, as you remain in control, but some borrowers miss out on the discounts because they ultimately don’t sign up for AutoPay.

Applying for several private student loans will not have a big impact on your credit. Credit reporting agencies are able to recognize shopping-around behavior if you apply for several student loans within a short time period. There will be just one hit to your credit score, as opposed to multiple hits. The typical impact is less than a 5-point reduction in your credit score, and it is usually temporary.

Also, some lenders and student loan marketplaces use a soft credit inquiry when determining interest rates, using a hard credit inquiry only when the borrower has decided to get the loan. A soft credit inquiry does not affect your credit score.

Be careful about using student loan marketplaces, which list loans from multiple lenders. They are usually pay for play, meaning that they only list lenders who pay them for a referral. Other lenders that aren’t included in the marketplace, such as state loan programs, may offer lower interest rates.

Not Checking Your Credit Before Applying for a Private Student Loan

Because eligibility for a private student loan, and the interest rates, depend on your credit scores, it is important to review your credit history for errors before applying for a private student loan.

Get a free copy of your credit reports from annualcreditreport.com at least a month before you plan on borrowing. Review the credit reports for errors.

You can get errors corrected by disputing the incorrect information. The creditor then has 30 days to either confirm the accuracy of the disputed information, or remove it from the credit report.

Inaccurate information can affect your credit scores, so correcting inaccurate information can yield a higher credit score.

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Paysafe Enables eCash Payments for US Auto Loans With Exeter Finance

Paysafe Enables eCash Payments for US Auto Loans With Exeter Finance


LONDON–(BUSINESSWIRE)–Paysafe (NYSE: PSFE), a leading specialized payments platform, today announced a new partnership with Exeter Finance LLC, a leading indirect auto finance company headquartered in Irving, Texas. Paysafe is expanding its presence in the payments space for US auto finance by offering its Paysafecash online cash, or eCash, solution as a payment method for Exeter customers.

After entering the American auto financing payments market in Q2 2021, Paysafecash is now available as Exeter’s newest alternative payment method and first eCash solution for the company’s 500,000+ customers. These customers can make payments safely and securely online using Paysafecash, a payments solution for unbanked and underbanked consumers, or anyone who chooses to pay with cash.

To make a loan payment, an Exeter customer simply logs-in to their account and selects Paysafecash as the payment method, generating an online barcode they either store digitally or print. After locating one of the 70,000+ US convenience stores, pharmacies or dollar stores that serve as Paysafecash payment points, the customer presents the barcode and completes the payment in cash.

Udo Müller, CEO of Paysafe’s eCash division, said: “We’re delighted to partner with Exeter Finance, which shares our commitment to promoting financial inclusion in the US Whether they are buying a car to get to work or take the kids to school, Exeter Finance customers favoring cash now have the alternative of Paysafecash, which meets their payment preferences and facilitates their overall loan repayments.”

Troy Miller, Executive Vice President of Servicing Operations at Exeter Finance, commented: “We are excited to offer yet another payment option to our more than half a million customers. Paysafecash provides them with a safe, easy way to pay using cash, and we’re pleased to have such an alternative available to enhance our customers’ experience.”

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About Paysafe Limited

Paysafe Limited (“Paysafe”) (NYSE: PSFE) (PSFE.WS) is a leading specialized payments platform. Its core purpose is to enable businesses and consumers to connect and transact seamlessly through industry-leading capabilities in payment processing, digital wallet, and online cash solutions. With over 20 years of online payment experience, an annualized transactional volume of over US $120 billion in 2021, and approximately 3,500 employees located in 10+ countries, Paysafe connects businesses and consumers across 100 payment types in over 40 currencies around the world. Delivered through an integrated platform, Paysafe solutions are geared toward mobile-initiated transactions, real-time analytics and the convergence between brick-and-mortar and online payments. Further information is available at www.paysafe.com.

About Paysafecash®

Paysafecash, from leading integrated payments platform Paysafe, is an eCash payment method for customers who want to pay online easily and safely using cash. Available in nearly 30 countries, Paysafecash makes online transactions possible for customers, who do not have a debit or credit card, or who do not want to use them online. Payments are made by generating a barcode during the online checkout, which can then be scanned and paid for in person at one of more than 190,000 payment points. Paysafecash was launched in 2018 by the same Paysafe team who created the award-winning, prepaid cash solution paysafecard in 2000. A market leader in eCash payment solutions, paysafecard allows customers to buy prepaid vouchers that they can then redeem online.

About Exeter Finance

Exeter Finance LLC is an indirect auto finance company headquartered in Irving, Texas. Founded in 2006, the company underwrites, purchases, services, and secures retail installment contracts from US automobile dealers. Exeter works with more than 12,000 dealers and over 500,000 customers nationwide providing indirect financing for both new and used vehicles. The company has a serviced finance portfolio of $8.5 billion. For more information, visit www.exeterfinance.com.



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Amazon to contribute $10.6M in loans, to affordable housing in Nashville

Renderings show design plans for the 96-unit mixed-income Cherry Oak Apartments development next to the Metropolitan Development and Housing Agency's headquarters in East Nashville.


  • Amazon’s contributions include $7.1 million in low-interest loans.
  • The company will provide a $3.5 million grant to nonprofit CrossBridge.
  • The money will go toward affordable housing projects in East Nashville and Rutledge Hill.

Amazon will contribute $10.6 million in low-interest loans and grants to build or renovate more than 130 affordable units in East Nashville and Rutledge Hill, the company announced Wednesday.

The commitment includes a $7.1 million loan to the Metropolitan Development and Housing Agency for the construction of the Cherry Oak Apartments, which broke ground in East Nashville Wednesday morning.

A $3.5 million grant to Nashville nonprofit CrossBridge will help fund the creation 50 new units and 34 renovated units for adults overcoming addiction.

The pair of investments are Amazon’s first concrete contributions to the creation of new affordable housing in Nashville.

The funds are drawn from the company’s $2 billion Amazon Housing Equity Fund, and are separate from a commitment the company made last June to provide $75 million in low-interest loans to preserve at least 800 Nashville rental units near WeGo public transit routes. Specific investments from that $75 million commitment have not yet been announced.



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How To Qualify For $17 Billion Of Student Loan Forgiveness

How To Qualify For $17 Billion Of Student Loan Forgiveness


Here’s how to qualify for $17 billion of student loan forgiveness.

Here’s what you need to know — and what it means for your student loans.


Student Loans

President Joe Biden is considering wide-scale student loan cancellation, but there could be limitations on who qualifies for student loan relief, how much student loan forgiveness there will be, and whether the president has the legal authority to cancel student loans. The good news is you don’t have to wait for any wide-scale student loan relief. Biden has canceled more than $17 billion of student loans since becoming president. These programs are still active and available to you now to get student loan relief. Plus, it’s particularly helpful if you want a fresh start on your student loans. Here are 4 ways to get $17 billion of student loan forgiveness.


1. Student loan forgiveness through public service loan forgiveness

Biden has canceled $6.8 billion of student loans for 113,000 student loan borrowers through the Public Service Loan Forgiveness program. Congress created this program in 2007 to help student loan borrowers get full federal student loan forgiveness. To qualify:

  • work full-time for a qualified public service or non-profit employer
  • enroll in an income-driven repayment plan and make a majority of your federal student loan payments while enrolled in this plan; and
  • make 120 monthly student loan payments.

You should also complete an Employment Certification Form annually and whenever you change jobs.


2. Student loan cancellation for total and permanent disability

Biden has canceled $7.8 billion for more than 400,000 student loan borrowers who have a total and permanent disability. There are three ways to qualify for a total and permanent disability discharge to get student loan forgiveness:

  1. Veterans: you have a service-connected disability that is 100% disabling or you are disabled based on an individual unemployability rating.
  2. Social Security Disability: you receive Social Security Disability Insurance (SSDI) or Supplemental Security Income (SSI) benefits.
  3. Doctor’s certification: A medical doctor can certify that you can’t engage in any “substantial gainful activity” due to a medically determinable physical or mental impairment.

Submit an application and any supporting documentation of your total and permanent disability.


3. Student loan relief through borrower defense to repayment

Biden has canceled $2.1 billion for 132,000 student loan borrowers through borrower defense to repayment. This federal program helps you get student loan forgiveness if:

  • your college or university closes while you’re enrolled or shortly after you withdraw, or
  • if your college or university misled you.

With borrower defense to repayment, you could get partial student loan forgiveness or total student loan forgiveness. You can apply for borrower defense to student loan repayment online.


4. Get your student loans canceled through income-driven repayment

Income-driven repayment plans such as IBR, PAYE, REPAYE and ICR are particularly helpful for student loan borrowers who are struggling financially. (Student loan forgiveness: 5 key takeaways from major announcement). Income-driven repayment can lower your student loan payment and get your federal student loans canceled. Contact your student loan servicer to enroll. Here’s a snapshot:

  • Your monthly federal student loan payment will be based on your discretionary income and family size;
  • It’s possible to pay as low as $0 a month in federal student loan payments;
  • After 20 years (undergraduate student loans) or 25 years (graduate student loans) of student loan payments, you can get automatic student loan cancellation of your remaining student loan balance.

Student loans: next steps

Student loan cancellation may seem inaccessible, but there are many opportunities to get student loan forgiveness. This is particularly relevant if Biden doesn’t cancel everyone’s student loans or even most student loan debt. Importantly, temporary student loan relief from the Covid-19 pandemic is scheduled to end on August 31, 2022. Evaluate all your options for student loan repayment now before student loan payments restart. Here are great ways to pay off student loans faster and save money:


Student Loans: Related Reading

Biden confirms he won’t cancel $50,000 of student loans—5 key takeaways

Bill Maher: Student loan forgiveness is a “loser” issue

Student loan forgiveness: 5 key takeaways from major announcement

How to get a fresh start on your student loans

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