NACM S 3565 Letter


[Senator / Representative]
Room # [Office Building]

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.

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. Being swept into the same category as a debt collection agency and into the same category as consumer collections is flawed, which will place business creditors at an unintentional disadvantage to doing business. Business credit professionals sell products and services via unsecured credit to continue stimulating the economy with the intention of being repaid. While these transactions on unsecured credit create debt for the buyer, our business like the thousands of others represented by NACM, is not debt collection. There must be a distinct separation of business credit and consumer credit collection.

The problem for business creditors arises when the borrower's company has inadequate financial strength to secure the credit as requested. In these instances, it is a common practice for the business creditor to ask for a personal guarantee as a safeguard for the extension of business credit. It is the presence of these personal guarantees that blurs the line between consumer credit and business credit. This distinction needs to be clear to all parties.

During this unprecedented pandemic, we have continued to sell 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. Provisions like those in S. 3565 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.

We realize these are extraordinary times, and we do not wish to bring about any additional hardship to businesses impacted by COVID-19. We also acknowledge that certain limitations on credit collection, particularly protecting consumers, may be necessary and appropriate to deal with this crisis. Despite this, we 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 business afloat so that the collections process can be avoided altogether.

Thank you for your time and consideration.