Cleveland businessman Allan Jones is somewhat surprised by the success of his Check Into Cash business. The corporation recently celebrated its first 25 years.
Jones took a break from the company’s birthday celebration at The Village Green recently, to talk about how he got involved in the business, and the trials and tribulations along the way.
One of Cleveland's community leaders, and a high-profile businessman, Jones reflected back to when he first came onto the idea of payday lending, providing small, short-term loans to people with immediate needs, and willing to pay a small fee.
In June 1993, Jones had a collection agency serving communities across Tennessee, and in Atlanta. He had offices in Cleveland, Chattanooga, Nashville, Tullahoma, Murfreesboro, Cookeville, Jackson, Memphis and Knoxville.
He did not have an office in Johnson City, but he had heard about a businessman there, James Eaton, who was operating a payday loan operation with surprising success.
"I was in Knoxville, when I heard about it," he said. "I left in my Piper Saratoga and flew to Johnson City to look at what he was doing."
What he discovered was a big surprise, and a decision maker.
"He was located in an old, dilapidated service station," Jones related. "The ceiling was peeling off, and he had an old metal sign on the outside of the building. He was making loans, conducting check-cashing, charging 20 percent, and customers were non-stop. I thought it would be easy to hire him."
Jones said Eaton told him it was a lot cheaper than overdrafts, and he was bringing his customers value.
He was also amazed when Eaton told him he wouldn't come to work for him. He said his business was the happiest place he had ever been.
Eaton's quick rejection of a possible job offer came from a pocket businessman, in a run-down service station. Still, it failed to dampen Jones' enthusiasm for the money-lending concept. He returned to Cleveland, and opened his first Check Into Cash store 10 days later.
The concept of the payday loan is very simple. If your electricity is about to be turned off, you need to put food on the table for the kids, pay a speeding ticket, a doctor or dental appointment, or have another financial emergency (and no available money), you can borrow $100 and pay it back within two weeks (for a $15 to $20 fee).
The criticism of these loan arrangements comes from renewals. If you can't pay the loan in two weeks, and renew, the fee on the same $100 climbs to $30 or $40. A second renewal will increase the cost to $45 to $60, thus the possibility of the percentage rate climbing to 400 to 500 percent, or more.
A one-time loan for $100 will cost you around $15, a 15 percent charge.
During the days following his Johnson City visit, Jones talked to business advisors concerning the laws, and whether or not he could contract for payday loans. They assured him he could.
He had an idea about a name, but on this issue gives full credit to Cleveland first lady Sandra Rowland, who was working for him at the time.
"As we were talking about starting the business, she said, 'What about Check Into Cash,'" he recalled.
Jones called on one of his collection/credit employees in Dalton, Georgia, to manage his first store in Cleveland. He said Bob Evans didn't think the concept would work, but didn't want to jeopardize his time with Jones' credit/collection business.
Those involved in the new business, and concept, had to do a little advertising and promotion.
"We had to explain it," Jones said.
The first store was located on Keith Street, and Jones admits he was leery of prospects for the future. "I thought people would come in, take our money, and not pay us back," he said.
Jones used only $1,000 (up front) of $10,000 targeted for the business, due to those concerns.
"That didn't happen," he added.
After a lull of a couple of days, the business took off.
"Bob called me and said, 'We've just had our first customer,' "
"That first transaction was a young U.S. Army recruiter," Jones remembers. "His son's birthday was that weekend, and he hadn't received his paycheck. He used the Check Into Cash loan to purchase a much-anticipated bicycle, and was happy to pay us back the following Tuesday."
Word of the new lending business spread quickly, according to Jones. "That first customer told five friends, and they each told another five people," he said in explaining the quick growth.
Check Into Cash then began spreading to other communities across Tennessee.
"We quickly opened eight additional locations, as we appealed to middle class citizens," Jones pointed out. He said the short-time, small loans are not for low-income clientele. “Many of them don't have checking accounts. We catered to housewives, nurses, and female school teachers. We even had some bank employees."
Jones said that when he realized bad debt wasn't an issue, the business continued to expand.
In August 1995, the corporation had 18 locations. Joe Decosimo — Jones’ accountant and advisor — convinced him Check Into Cash was a good business and ready for expansion.
Jones then decided to make a big push and called in Check Into Cash President Steve Scoggins. He told him he was ready to invest $1 million of his own money — not company money — in 42 locations. The idea was to have 42 locations on Jones’ 42nd birthday (December 31, 1995).
“I was financing the company out of my hip pocket,” Jones said.
Scoggins exceeded the request and by Dec. 31, the company had 63 locations, all in Tennessee.
The business then ventured outside the state, first to Kentucky and Indiana, which offered licensing.
In 1998, Check Into Cash got a new home when Jones purchased the original Cleveland mall, The Village Green. This was around the five-year anniversary of the start of the business.
The investing and expansion continued, as well as some serious legal challenges.
Jones said he did not take a penny from the business over its first 10 years of existence, instead putting all of the money back into the corporation. Of course, he had his other businesses for personal revenue at the time.
He appreciatively touched on valuable loans he obtained along the way in financing the business. These include his first personal note of $650,000 from Sam McReynolds of Bank and Trust, $3.5 million from Sirrom Capital, and $12 million from Nations Bank, which he received at below prime rate.
"I didn't know they had a loan below prime rate," he said.
"The cash was going out, and we referred to it as a 'Cash Pacman'" Jones said. But, payments and a profit were coming in.
Then came the legal challenges to the payday loan business, and long days before the General Assembly in Nashville. The battles included ones with another Cleveland businessman, the late Toby McKenzie, who had launched National Cash Advance (another payday loan business), which he later sold.
"But, we won," said Jones of the passage of the Tennessee Deferred Presentment Services Act, which allows licensing for payday loan businesses.
Today, there are continued changes and new challenges in the business, added Jones. "The Consumer Financial Protection Bureau has changed our model."
He said that over its initial 23 years, Check Into Cash never filed a lawsuit against a customer for nonpayment. "We worked with our customers, and we would talk with them, and attempt to help them." He said they would eventually pay off the loan, since they were of a relatively small indebtedness.
"Now, the federal government wants us to file lawsuits for nonpayment," Jones added.
Jones said the business is struggling with federal legislation, and has cut back from 1,300 stores across 30 states, to about 900 stores. Still, he is positive about the future.
(President) "Trump has made a huge difference, and we should see some relief soon," he said.
Jones said federal regulators are varying on some of the rules for the business. He said the issues were cloudy, but are clearing up.
Despite the ups and downs, Jones and his Check Into Cash corporation are celebrating a positive first 25 years.
It all started with an unusual concept in a dilapidated service station in Johnson City. It began locally with the first transaction being for a young man's much-desired bicycle, as big an emergency as you can find on a birthday for a youngster.
The business also had a big, 25-year birthday recently, but fortunately didn't need a loan.
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