The COVID-19 coronavirus pandemic has affected millions of Americans, and its effects have been felt in just about every industry – from manufacturing to finance, hospitality, restaurants and more. But how is it affecting the payday loans industry? Let’s find out.
Some Physical Payday Loan Offices Have Been Shut Down Due to Shelter-In-Place
To help slow the spread of COVID-19 coronavirus, many states have issued “shelter-in-place” orders. These orders are designed to force people to stay at home and avoid social contact – and also include provisions that shut down “non-essential” businesses.
And while some states like Illinois have included “banks and financial institutions” on their list of essential businesses, other states like New Mexico, Michigan, and Wisconsin have not. Some payday loan chains are being shut down or threatened with shutdowns in these states if they continue to operate their businesses normally.
However, there are no laws related to COVID-19 coronavirus that halt the ability of lenders to offer online payday loans, so online-only payday lenders are likely to have no issues with physical branch closures due to state-wide shelter-in-place orders.
Overall Payday Loan Application Volume Is Likely to Grow Due To COVID-19 Coronavirus
More than 22 million Americans have filed for unemployment in the last four weeks alone, due to the shuttering of many “non-essential” businesses, and the worldwide ripple effects of COVID-19 coronavirus on the economy.
That means that overall, payday loan application volume is likely to grow. Despite recent $1,200 cash deposits that have been sent to many Americans, many households are likely to have trouble making ends meet until they can get unemployment payments or can get a new job.
It’s likely that, due to this fact, payday loan application volume will climb in the coming weeks as the economic impacts of the COVID-19 coronavirus pandemic are felt throughout America.
Two phone-based digital lending apps, Dave and Earnin, have seen a dramatic jump in applications in the last several weeks due to the COVID-19 coronavirus. While statistics for payday loan applications in the US in the last few months are not readily available, it’s likely that there has been a major growth in total application volume.
While some banks are considering new loan options intended to help Americans through the COVID-19 coronavirus crisis, these may not be available for weeks – and could only be available for borrowers with reasonably good credit scores.
People who need quick cash to cover their expenses while they wait for government assistance are likely to turn to short-term loans – and if they have bad credit or no credit, this likely means that payday loans are their only option.
The Payday Loans Industry Is Likely to Remain Strong Throughout The COVID-19 Crisis
While many industries are suffering due to the COVID-19 coronavirus pandemic, it’s likely that most payday loan companies will come out of this crisis without any major problems.
Although some physical loan offices may be closed, the industry as a whole will continue processing applications and lending to Americans who need quick cash, and is likely to remain relatively strong throughout this crisis.