Stan Collender, federal budget expert, said federal employees would need some type of short-term loan to help them get through the rough patches. For people unable to seek help from family and friends, payday loan companies can give them some benefit.
It’s now day 21 of the government shutdown, and 800 or so federal employees are either working without pay or have been furloughed. What would have been payday on Jan. 11, has come and gone and no one got paid.
Conventional payday lenders are not the only option to these workers. Many credit unions serving these employees are providing loans during the shutdown and not charging enormous interest rates that are typically tied to cash advances. For example, the Navy Federal Credit Union will loan up to $6,000 to eligible members with no interest rate or fees. The Congressional Federal Credit Union will offer a line of credit for no interest for 60 days.
These offers make sense, especially since most studies show Americans don’t have much savings to fall back on. Bank of America and Wells Fargo are offering some semblance of help by waiving monthly and overdraft fees. However, they’re not offering these kinds of loans to those affected.
None of the payday loan industry trade groups or other companies have made no comments about the matter.
Tax preparation companies may see a rise in demand for refund-advance loans. While the Trump administration announced the IRS would accept and pay out refunds, the shutdown still threatens sending out actual refunds.
Collender said the shutdown hurts both small and big companies, and there are more losers than winners. He said companies that cater to government workers might have to reduce their staff and small firms that bring in office supplies may not make up the financial difference.
Air travel is greatly affected by the shutdown and goes beyond the TSA agents. It also affects air traffic control, which doesn’t have the funds to send people through the training process and this is leading to fewer air traffic controllers monitoring the skies.
The Securities and Exchange Commission is also affected by the government shutdown, as things can’t be sign-off on, which can be detrimental to a business. For example, the initial public offering process is experiencing delays – some of them that should have taken place in 2019.
Although the government is only 25 percent shutdown, it’s implication is having a wider reach to more than just federal workers. And, it’s why many people may turn to payday loans to help them through the tough economic times.
