Payday lenders say economic hit looming

Law to limit loans passes state Senate

By LARRY RINGLER Tribune Chronicle
WARREN — For Warren’s George Axiotis, a looming state law capping his payday lending business’ earnings power means closing his five Cash Today stores and leaving the area where his family has lived for nearly 100 years.

For W. Allan Jones, chief executive of Cleveland, Tenn,-based Check Into Cash, it means the likely closing of 92 Ohio stores — about a dozen of them in Trumbull and Mahoning counties — 90 days after Gov. Ted Strickland signs the law, as he’s expected to do.

Gloom descended on payday lenders this week after the state Senate approved a bill that would limit borrowers to four short-term loans a year and cap annual interest rates at 28 percent.

The Ohio House must still approve the bill. House Speaker John Husted said he expects it to be an easy step. Strickland said he supports the measure.

Payday lenders generally charge about $15 for every $100 borrowed on a two-week loan, which would be the equivalent of a 391 percent annual interest rate. The bill would limit the annual interest rate to 28 percent, or just $1.10 for each $100. It also would limit the number of loans customers could take in a year to four, among other restrictions.

Two companies that employ about 2,200 workers in Ohio said Thursday that they may be forced to shut down their operations in the state if legislation is enacted that would create one of the nation’s strictest laws governing payday lending.

Cash America International, a Fort Worth, Texas-based company, operates about 139 check-cashing and short-term loan stores in Ohio, employing about 1,700 workers. It is the parent company of Cashland stores.

Cash America said it is reviewing its options and anticipates closing the stores if the legislation is enacted into law and the company can find no way to offer financial services that would cushion the impact.

‘‘We are trying our best to not close our doors,’’ company spokeswoman Yolanda Walker said. ‘‘If we don’t find an alternative, we will be forced to do so.’’

The Spartanburg, S.C.-based Advance America, Cash Advance Centers Inc., employs 538 workers at its 246 Ohio payday-lending centers.

Spokesman Jamie Fulmer said the centers will be forced to close ‘‘short of any other solution’’ if the legislation becomes law 90 days after Strickland’s signature.

Axiotis said he’s not sure if he’ll keep his five stores open until then, but he said he’s not taking any new customers. He said he’s sure of one thing about the business he started two years ago: ‘‘There’s not a chance we can make money. It’s a shame, a travesty.’’

Closing his stores will displace 10 workers — a figure multiplied by an estimated 38 total payday lending stores in Trumbull County — and leave 7,000 square feet of office space empty, he said.

Axiotis, who said his grandfather came to Warren from Greece in 1915, said he plans to sell his house and move to Florida. He said that state capped the number of loans customers can take out at one time but which kept the fee of $15 per $100 loan amount.

‘‘Florida fixed their industry. They made legislation to protect the customer and the industry,’’ he said.

Check Into Cash’s Jones said his private company provides jobs for about 300, including support workers, and occupies some 5 million square feet of office space in Ohio. He said the legislation already is taking its effect.

‘‘We’ve stopped advertising. We’ve stopped taking new customers,’’ he said.

Axiotis and Jones said they don’t know where their customers will turn for quick loans between paydays.

‘‘They’ll have no other option to borrow,’’ Axiotis said of his 1,000-plus customers.

Jones said his company’s No. 1 customer is a female schoolteacher with unexpected car repairs.

‘‘There’s nowhere for them to go,’’ he said.



The Associated Press contributed to this report.

lringler@tribune-chronicle.com