Pilot Program for Increased Access to Responsible Small Dollar Loans.

(1) Existing law, the California Finance Lenders Law, generally provides for the licensure and regulation of finance lenders and brokers by the Commissioner of Business Oversight and makes a willful violation of its provisions a crime. Existing law prescribes limits on the maximum rate of charges and administrative fees that a licensee may contract for, and receive, on loans of up to $2,500. The California Finance Lenders Law, until January 1, 2023, establishes the Pilot Program for Increased Access to Responsible Small Dollar Loans, which requires licensees and other entities that wish to participate in the program to file an application and pay a specified fee to the commissioner to participate in the program. The program authorizes a licensee approved by the commissioner to participate in the program to impose specified alternative interest rates and charges, including an administrative fee and delinquency fees, on unsecured loans of at least $300 and less than $2,500, subject to certain requirements. This bill would apply the prescribed limits on charges and administrative fees that a licensee under the California Finance Lenders Law may contract for, and receive, described above, to loans of up to $5,000. This bill would delete the repeal of the Pilot Program for Increased Access to Responsible Small Dollar Loans, thereby extending the program indefinitely. The bill would increase the amount of a permissible loan under the program from $2,500 to $5,000, make conforming changes, and revise the statement of legislative findings for the program. By broadening the definition of a crime, this bill would impose a state-mandated local program. (2) The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement. This bill would provide that no reimbursement is required by this act for a specified reason.