Short term lenders press on despite unfair government regulations

Short term lenders are a resilient bunch. As municipal, state and federal governments continue to crack down on a business model they deem "predatory," those who provide short term loans to consumers in need are fighting on by lobbying for their industry, offering loans online and relocating their storefronts to places where they are still welcome. The short term loan industry has been incredibly profitable in recent years by opening a line of nontraditional credit to consumers in need of fast cash. Without these short-term loans, many customers would not have the opportunity to cover their expenses when emergencies arise. Loan fees are normally around $15 to $30 per $100 borrowed - a number that many lawmakers argue is unfairly high. The short-term nature and small amounts of short term loans make the interest rates and fees manageable. And, as short term lenders point out, the fees for a cash advance are often far less than those associated with overdraft fees, utility shut-offs and other consequences. "While they claim to represent the best interest of the consumer, anti-short term lending activists seek to limit the already small number of short-term credit options available," explains the Community Financial Services Association of America. Still, many states have severely limited or banned the practice of short term lending altogether. According to America's News Online, West Virginia ran short term loan stores out of the state many years ago, Pennsylvania passed strict regulations on the industry in 2006 and 2008, New York sued short term lenders into oblivion in 2003 and 2004 and Georgia capped APRs on short term loans at 60 percent in 2004. These states are not alone. Regulations in Arizona, Arkansas, Connecticut, Colorado, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, North Carolina, Vermont and the District of Columbia have essentially driven short term lenders out of town. To combat these growing barriers to their business, short term lenders are becoming more flexible. They've had the choice to stay and fight or flee to higher ground, and many businesses chose the latter, moving to states that are more accommodating to their industry. For example, lenders are finding respites in Delaware, Idaho, Nevada, South Dakota, Utah and Wisconsin, where there are no caps on short term loans or interest rates, according to the Consumer Federation of America. In addition to changing their physical locations, short term lenders are following the lead set by many other business owners and heading to the internet. Short term loans are offered online, which can often speed up the borrowing process and improve the loan experience for the consumer. "Technology is in our favor," writes the Short term Loan Industry Blog. "Technology knows no boundaries. Pay attention to internet solutions. Get acquainted with 'peer-to-peer' lending."