AFSA does in-depth study on Municipal Zoning Restrictions

AFSA’s State Government Affairs department this month published its Municipal Zoning Restrictions white paper. AFSA’s white paper takes an in-depth look at recent activity by municipalities seeking to regulate small loan locations, including trends in introductions of such ordinances and recent state legislation setting requirements for municipalities looking to regulate small lending.

Some municipalities, dissatisfied with state law, have used zoning ordinances to restrict the growth and activities of payday lenders and check cashers within their own cities and county borders.

While these ordinances are usually cited as a means to keep payday and title lenders in check, they are sometimes written so broadly that they have significant unintended consequences for other sources of small dollar credit, including traditional installment lenders.

The shortcoming of this approach has often been a failure of local lawmakers to appreciate the differences between payday loan-type products and safe and affordable traditional installment loans. Zoning ordinances that intend to tackle problems associated with predatory lending, but fail to exempt safe, beneficial credit options for local borrowers, create “credit deserts,” leaving local individuals either without recourse or forced to turn to black market sources.

AFSA’s State Government Affairs team publishes white papers monthly, and AFSA members can find previous papers on AFSA’s website under the SGA Resources section.