Lame Duck Expectations

This week, Senate Republicans released their versions of the FY2021 government funding bills and have started immediate negotiations with House Democrats to reconcile differences. Both parties are heavily motivated to reach a deal in the coming month and a half. Republicans need a win that will help keep their seats in the Georgia run-off, and Democrats are trying to clear the slate before President-elect Joe Biden takes office.

This likely means there will not be any major surprises or changes to current law in the appropriation bills. It is possible that the funding bills could include additional COVID-19 relief funding, but talks are not far enough along to meaningfully predict. At this time, we do not expect significant changes to bankruptcy or collections law, such as were included in the House’s HEROES Act.  

One week before the election, and with more than 25 million votes already cast, we are in the final stretch of the 2020 election cycle. In the past month, Democrats have continued to widen their lead, with former Vice President Joe Biden generally leading by double-digits in national polls and Democrats predicted to have a significant chance of securing a majority in the Senate. NACM’s lobbyist, PACE LLP, offers its breakdown on current expectations, although as with any election, things can change very quickly.

Dear Representative [Last Name]:

On behalf of [name of your Business] and our [# of employees], I am writing to express concern about Section 601 of the HEROES Act which would significantly curtail business-to-business debt collection during the COVID-19 pandemic. While I understand the need to help protect consumers from debt collection efforts during these unprecedented times, it is important not to extend those provisions to include business-to-business debt in order to protect the U.S. product supply chain and our ability to provide small businesses with the products they need to serve their customers. 

Our business is one of thousands that, collectively, are represented by the National Association of Credit Management (NACM). The vast majority of NACM members are small manufacturing or product-based businesses that provide products—from lumber to toilet paper—to retailers and contractors across the country. These products are commonly sold using open, unsecured credit to businesses. However, we are not debt collectors; we are the backbone of the U.S. economy and our respective businesses. 

During this unprecedented pandemic, we have continued to provide unsecured credit in the form of products to support the businesses across the country selling products to the American people. While we take these risks for the benefit of these small businesses, we do so with the expectation that we can recover at least a portion of our assets through the collections process. Eliminating this process would force our business to only sell product to low risk businesses, which will dramatically cut off supply lines to thousands of small retailers across the country.

I realize these are extraordinary times, and do not wish to bring about any additional hardship to businesses impacted by COVID-19. Despite this, I urge the utmost caution as Congress tackles this complex issue. Eliminating business-to-business collections would only serve to shift the burden from one business onto another. Rather than create a system of winners and losers in the collections industry, we request that you support proposals that keep small businesses afloat so that the collections process can be avoided altogether. 

Thank you for your time and consideration.

[DATE]

[Senator / Representative]
Room # [Office Building]
[Address]

Dear [Senator/Representative]:

On behalf of [name of your Business] and our [# of employees], I am writing to express our concern about the unintended impact that S. 3565, the Small Business and Consumer Debt Collection Emergency Relief Act of 2020, will make to the U.S. business collection process. These changes could jeopardize the U.S. product supply chain and the ability for many small businesses to access the product they need to serve their customers. In particular, provisions like those included in S. 3565, while well-intentioned, would have a negative rippling effect across the U.S. trade and manufacturing industries.

Current State of Play

The third COVID-19 Supplemental Appropriations bill, titled the ‘Coronavirus Aid, Relief, and Economic Security (CARES) Act’, was signed into law on Friday, March 27, 2020. The $2 trillion legislation provides significant immediate support to businesses, governments, and individuals impacted by COVID-19. While billed as a ‘stimulus’, the legislation is more geared towards keeping businesses and individuals economically afloat for the duration of aggressive social distancing required to keep the virus from overwhelming the U.S. health care system. A few of the key provisions include:

COVID-19 Legislative Update

Summary and Current Outlook

Social distancing necessitated by COVID-19 has shut down more than 60% of the U.S. economy, creating a unique, temporary recession combined with the largest spike in unemployment in U.S. history. Congress has addressed this in a series of three legislative packages, to provide emergency funding for existing programs, as well as to help stabilize businesses that have had to shut their doors during the crisis.

A new bankruptcy bill introduced into the U.S. Senate would curb “forum shopping” in Ch. 11 cases by tightening the wide range of allowable bankruptcy venue options currently available. These court venue options, including a place of incorporation, principal place of business and assets, or where an affiliate has filed a case under Ch. 11, have led to an increase in companies filing outside their home states or principal place of business, concentrating cases into a few districts like Delaware and New York, the bill states.

California is the first state to have a payment transparency law in place for state agencies. The state now requires agencies to post to their websites information about a project that will help subcontractors and suppliers know their payment rights. Gov. Jerry Brown signed AB1223 into law earlier this month to hold state agencies and prime contractors more accountable.

Two major changes are now in effect across the country that will help small businesses grow and gain new opportunities. The Small Business Administration (SBA) announced changes to the Surety Bond Guarantee Program earlier this month, and they became official Sept. 20. The amendments from the SBA were initially proposed and published in the Federal Register last month.

Updating U.S.-Cuba trade relations will benefit American farmers and ranchers and the country as a whole. This is the stance the American Farm Bureau Federation (AFBF) took in a recent post on the issue.