This week looms as critical for the continuing availability of refund anticipation loans as the nation's two largest tax preparation chains face decisions about their programs. The key events are a scheduled hearing on Jackson Hewitt's week is equally as crucial with one. In fact, one equity analyst, Bob Mowry of Underanalyzed Equities Research, posted an article with "Seeking Alpha, an online publication, in which he stated "Put plainly, JH is on the verge of bankruptcy."
Whatever the possibility, the company faces a Friday, November 19, deadline for informing its lenders about how it will fund 100 percent of its RAL program. During the last tax season, the chain was able to get backing for only 50 percent of its loans by Republic Bank. That came after Santa Barbara Bank & Trust was forced from the refund loan business by regulators.
The inability to provide loans at half of its locations seriously hurt Jackson Hewitt's tax preparation business as consumers went elsewhere seeking RALs. Under the terms of a new credit agreement, the company must provide lenders with a written statement about the sources for funding all of the program for the 2011 tax season. It already has a commitment for Republic to provide loans at the same number of locations for the upcoming season.
