S.B. 537 Summary

• Establishes new chapter regulating small dollar installment loans with consumer protections including 36% annual interest rate cap, monthly maintenance fees capped at $10-$25, and monthly payments limited to 5% of gross income or 6% of net income.

• Requires licensure of small dollar lenders by the Division of Financial Institutions beginning January 1, 2020, with surety bond requirements ($30,000-$250,000) and annual licensing fees.

• Transitions payday lending from lump-sum deferred deposit transactions to installment-based loans with full amortization, prepayment rights without penalty, and prohibition of multiple concurrent loans to same borrower.

• Requires check cashers to register with the department and offer voluntary payment plans to customers after three consecutive deferred deposits, structured as at least six equal monthly payments not exceeding 5% of paycheck.

• Appropriates funds for two full-time examiner positions in the Division of Financial Institutions to oversee the small dollar loan program.