Bill > SB318

This bill establishes a "Pilot Program for Increased Access to Responsible Small Dollar Loans" to address a perceived gap in the availability of loans between $300 and $2,500, building on a previous program. It repeals an older pilot program and creates a new one under the authority of the Commissioner of Business Oversight, who will oversee participating lenders. Licensed entities can apply to join the program, and new entities can apply for both a license and program participation. The bill outlines specific requirements for loans made under the program, including unsecured status, simple interest accrual, clear disclosures to borrowers, minimum principal amounts, and loan terms based on loan size. It also sets limits on interest rates and administrative fees, with different fee structures for first-time and subsequent loans to a borrower, and includes provisions for refinancing loans under certain conditions. The program also addresses delinquency fees, insufficient funds fees, and requires lenders to offer credit education and report borrower payment performance to credit bureaus. Lenders must underwrite loans carefully, verifying borrower income and debt to ensure repayment ability, and must notify borrowers of payment due dates. The bill prohibits certain insurance sales and waiving of borrower rights as a condition of obtaining a loan, and it defines the role and limitations of "finders" who connect borrowers with lenders. Finders are compensated by lenders, not borrowers, and have specific reporting and compliance requirements. The program is set to expire on January 1, 2018, unless extended, and the Commissioner of Business Oversight will report on its utilization and effectiveness. Finally, the bill amends existing law to ensure that any willful violation of loan provisions by a licensee or unlicensed person makes the loan contract void, meaning no principal or charges can be collected.