The following is from the Office of Legislative Research
Regarding the changes to the small loan statutes, the bill, among other things, expands the scope of activities that require licensure and simplifies the definition of a “small loan,” which under the bill is any monetary loan or extension of credit, or the purchase of, or an advance of money on, a borrower’s future income where the amount or value is $15,000 or less and the Annual Percentage Rate (APR) is greater than 12%. It also converts the existing interest rate structure to an APR capped at the maximum 36% allowed under the federal Military Lending Act. It requires small loan licensure to be done through the Nationwide Mortgage Licensing System and Registry (NMLS or “the system”) and changes the license application fee structure and the length of time a license remains valid. It establishes permitted and prohibited licensee practices and loan provisions.
The most relevant provisions are the following, in Connecticut General Statutes 36a-555
- It is a “small loan” under $15,000
- Based on a “borrowers future income”
- The Annual percentage rate is capped at 36%
Further Connecticut General Statutes CGS 36a-566provides in part that
pursuant to section 36a-565, as amended by this act, no person shall, by any method, including, but not limited to, mail, telephone, Internet or other electronic means, unless exempt pursuant to section 36a-557, as amended by this act:
(1) Make a small loan to a Connecticut borrower;
Important things to note, this applies to
- internet loans
- small loans to consumer borrowers and
- appears to make a small loan unenforceable if there is no license by the lender
Attorney Robert M. Singer
Law Offices of Robert M. Singer, LLC
2572 Whitney Avenue
Hamden, CT 06518
203-248-8278