- Associated Press - Friday, January 6, 2017

PIERRE, S.D. (AP) - Nearly half of South Dakota’s short-term lenders didn’t renew their state licenses for 2017 after voters capped the interest rates the businesses can charge, according to information released Friday by the state Division of Banking.

Eighty-five lenders reported they didn’t renew because their products didn’t comply with the new regulations. That’s about 47 percent of the 179 small-dollar lenders operating in South Dakota as of October 2016, according to Banking Division director Bret Afdahl.

A money lender license is required to keep lending or collecting on existing loans. The division said that at least 41 short-term, payday or title lenders renewed their licenses but reported they aren’t issuing new loans.

The initiative approved by voters in November was aimed at protecting people from predatory lending, and limits interest rates charged by businesses such as payday, auto title and installment lenders to 36 percent annually.

Opponents of the measure had warned that it would drive out businesses that serve a need for people who can’t get loans elsewhere. That’s how a recent rate cap initiative played out in neighboring Montana, where state figures show regulated short-term lenders plummeted from over 100 to none within several years of its 2010 approval.

Check Into Cash closed its eight South Dakota locations before the end of the year, and at least 30 people lost jobs, said Lisa Ferguson, director of government relations.

Chuck Brennan is not only closing his Dollar Loan Centers across the state, he will sell the sprawling Badlands Pawn complex in Sioux Falls, Badlands Motor Speedway in Brandon and Brennan Rock and Roll Academy, KELO-TV reported. More than 400 employees will lose their jobs when everything is closed.

Top payday lending chain Advance America has closed its 11 South Dakota locations and let go of 20 employees because of the initiative, Jamie Fulmer, senior vice president of public affairs at the company, said in an email.

“Unfortunately, Measure 21 has abolished the regulated short-term loan industry in the state, forcing South Dakotans to turn to unregulated, less flexible and more expensive options,” Fulmer said.

A key lender in the campaign against the rate cap, Georgia-based Select Management Resources LLC, didn’t immediately return a telephone message requesting comment. The company, which has at least nine locations in South Dakota under the name North American Title Loans Inc., is among lenders that renewed their licenses but aren’t offering new loans.

Incoming Democratic state Sen. Reynold Nesiba, who helped lead the rate cap campaign, said consumers are better off with virtually any alternative to a payday loan. That could include selling a possession, asking for help from a friend or family member or getting public assistance.

Nesiba said also that he’s not sure that the lenders are finished fighting, saying he thinks “they will not go quietly and may make one more legislative attempt” at a different lending product.

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