SPRINGFIELD, Ill. (WICS/WRSP) — After Gov. JB Pritzker, D-Illinois, signed the Predatory Loan Prevention Act into law Tuesday, many payday and title loan offices will be closing their doors in Illinois.
The bill was designed to help disenfranchised Black and brown communities not get taken advantage of by lenders. But, according to officials at LendNation, the bill has forced them to stop operating in Illinois.
"The Predatory Loan Prevention Act will substantially restrict any entity from making usurious loans in Illinois,” Pritzker said.
The law caps payday and title loans at an interest rate of 36% — a number LendNation officials say is far too low.
"That's just not an area that we can do,” said Doug Nickerson, Chief Financial Officer for QC Holdings, which owns LendNation. “We have had that happen in many states and we have had to close all of our stores in those states whenever a 36% cap is put in."
For Nickerson and the company, Illinois is now inoperable territory.
"We will close all of our 26 stores,” Nickerson said. “We have notified all of our employees. All 50-plus employees will be out of work."
Nickerson said the costs of operation cannot be covered with a cap of 36% and that they will not be the last lender to leave the state.
"We're not alone," Nickerson said. "I think across the industry, you'll see most providers like us close and other employees, probably thousands, lose their jobs because of this."
But, those in favor of the new law saw it is necessary to protect vulnerable Illinoisans.
"This reform offers substantial protections to the low-income communities so often targeted by these predatory changes,” Pritzker said.
On the other hand, Nickerson said all the law does is take a lifeline away from those who need it.
"They are going to have more bounced checks and overdraft fees,” Nickerson said. “Those are far more expensive than what the cost of our products are."
State Sen. Jacqueline Collins, D-Chicago, the chief sponsor of the legislation, said this bill will help stimulate the economy by preventing cycles of debt.
But, Nickerson said it will have a negative effect by taking away options from those with low incomes or bad credit.
The Predatory Loan Prevention Act is part of the Illinois Legislative Black Caucus' economic equality pillar, one of four pillars they say will change systemic racism in Illinois.