Summary of HB 5572: Small Loan Licensees

• Establishes comprehensive licensing requirements for small loan lenders making loans up to $15,000 with APR exceeding 12%, effective July 1, 2016.

• Sets APR caps at the Military Lending Act rate for loans under $5,000 and 25% for loans between $5,000-$15,000; prohibits interest rate increases due to default, prepayment penalties, and adjustable rate provisions.

• Requires licensees to maintain $50,000 in available funds per location, submit financial statements, and prohibit loan splitting or multiple simultaneous contracts by borrowers to circumvent rate limits.

• Restricts lead generators from using automatic dialers without consent, calling outside 8 a.m.-9 p.m., collecting Social Security numbers, and prohibits misleading advertising or referrals to unlicensed lenders.

• Grants the Banking Commissioner broad examination and investigative powers, including authority to suspend or remove individuals from the small loan business and assess civil penalties for violations.