Working: Richard Frost

By Patrisha McLean | Apr 19, 2009

Rockland — “I love the beauty of it because it’s so simple. I give you money, you pay me back.”

That’s how Richard Frost describes the work he does in the shop with the bright purple and yellow sign reading Paycheck Advance. He lends up to $500, with all of it plus a “small service charge” due on the next payday.

“Something has come up to leave them short,” he said of his customers. Mostly, “it’s day to day living. Food, utilities, doctor’s bills, car repairs. A lot of the people who come here have good financial information. It’s just timing. They’re going to be paid in 10 days but they need money right now.”

Richard was working in corporate sales in Chicago when he first became aware of how the fifth of Americans without a bank account do their banking. A check cashing business in a rough part of town “piqued my curiosity," he said. "I thought, what’s behind those steel bars?” He learned when he bought one and then two check cashing franchises in St. Louis after losing his sales job. “People think we’re making money hand over fist but I made thinner margins than the grocery store and it’s a huge risk,” he said.

In 2002, in Key West, he moved from check cashing to paycheck lending, which he calls a step up: “No cash, no bulletproof windows,” he said. His funds are deposited electronically in the client’s checking account and come back to him the same way when the loan is due. Richard added that while “human character hasn’t improved any,” paycheck-lending clients are more reliable than check cashing ones because “not only do they have bank relationships, they have to be in good standing. That knocks out 75 percent of people.”

Still, “there are no guarantees," he said. "All you want to do is what [Warren] Buffet does, put the odds in your favor.”

That’s the principle around which Richard’s business revolves. Even though he could run his business with just an 800 number and a computer, and did after moving to Maine four years ago, a storefront allows him to size up prospective clients. “Five seconds is about all I need,” he said. By looking at past bank statements, he said, “I’m checking stability.”

Another risk-reduction method is: “No phone, no loan. When you get to the point when you don’t have a phone, how many other things have they not paid?” Some 20,000 money lending transactions in three states have taught him: “The younger, the worst,” and “if I have to lend to a male or female I’d rather lend to a female.”

Locally, the many pay stubs he sees prove that “there’s not a lot of money in the Midcoast, at least not in Rockland,” and an awful lot of the people here subsist on Social Security.

Richard has a few customers who come to him before every single payday. “I get a little worried about them sometimes,” he said, “but that’s just the way they organize their lives. There are people who save and people who spend. I’m an excellent saver and I’ve been that way since I was 5 years old.”

According to Richard, it is a coincidence that his storefront sprang up on Route 1 just as the economy began to crash. Bad times being good for payday lending, he said, is true only to a degree: “When times are too rough people can’t pay their loans back.”
Comments (0)
If you wish to comment, please login.