ARGUS, South Dakota–Following approval of a cap on interest rates, nearly half of South Dakota’s licensed money lenders chose not to renew their licenses for 2017 or indicated that they plan to stay only long enough to collect on existing loans, according to the Argus Leader.
The move, which follows a vote in favor of the cap on rates charged by payday lenders, has led 121 such lenders to exit the state, the Argus Leader reported. Another 75 have told the South Dakota Division of Banking that they renewed their licenses to make good on existing loans before exiting.
In 2016, 440 lenders applied for licenses. That number was down to 308, per the most recent numbers, the publication said it found.
Each of those 308 lenders remaining must comply with the law, which caps interest rates for money lenders at 36%. In the weeks following its implementation in November, payday loan providers said they couldn't afford to continue issuing loans in South Dakota at such a low rate, according to the Argus Leader.
The bulk of lenders opting out of South Dakota licenses said they had previously provided loans that exceeded the rate cap, the Argus Leader said, adding that at least 41 of the 75 businesses that renewed their licenses said they would no longer offer loans due to the cap.
Jamie Fulmer, senior vice president of public affairs with Advance America, told the Argus Leader that South Dakota’s Measure 21 will force “South Dakotans to turn to unregulated, less flexible and more expensive options.”
Bret Afdahl, director of the South Dakota Division of Banking, told the Argus Leader he has urged those seeking a loan to work with a bank or credit union or to seek out small-dollar or online lenders that remain.