Payday loan businesses closing

Short-term lenders said they would go out of business if Initiative 164 passed — and they weren’t bluffing.

So-called payday lenders and title loan businesses have ceased lending across the Flathead Valley and the state, and most are making plans to shut their doors within a matter of weeks.

Check ‘n’ Go on West Idaho Street in Kalispell quit lending even before Tuesday’s election in which 73 percent of voters approved a cap on payday-loan interest rates.

“Today is our last day of doing any kind of business like check cashing. The final day is Nov. 19, and then we’re out of here,” store manager Alyssa Blasdel said Friday.

The Alabama-based business is closing five other Check ‘n’ Go stores in Billings, Helena, Butte, Missoula and Great Falls, putting Blasdel and nine other people out of work.

Blasdel said she is upset about I-164 not only because she’s losing her job, but also because it will hurt people who have no other options for borrowing money.

“I know there is a need for the industry. I got to know my customers really well,” she said. “They (often) don’t have credit, they don’t have family members they can borrow from.”

It’s estimated that about 800 people associated with short-term lenders will lose their jobs. The industry made that claim in its official opposition statement to I-164, and it made clear that lenders would go out of business entirely.

Proponents of the initiative, most notably a Missoula-based group called MNS Strategies, contended that it was necessary to protect consumers who are vulnerable to getting into a “cycle of debt.”

Payday lenders acknowledge having repeat customers, but they also say that many customers take occasional emergency loans.

“You can thank MNS Strategies for putting me out of business,” said Shelley Gould, who has owned Ready Cash on U.S. 2 in Evergreen for the last 10 years. “What irks me the most, I guess, is the campaign and the way it came across. It was a fine line in not telling the truth, and they got away with it.”

Under current law, payday lenders can charge an annualized percentage rate of up to 650 percent and the initiative lowers the maximum APR to 36 percent.

Advertisements for the initiative referred to the more common practice of charging a 400 percent annual percentage rate.

But Gould and other lenders say that is alarmingly misleading, because they make short-term loans of 14 to 31 days rather than annual loans.

The interest charged on a two-week, unsecured $100 loan at Ready Cash has been $17.

Starting Jan. 1 when the initiative takes effect, the maximum rate on a two-week $100 loan will be $1.38.

Short-term lenders warned that would put them out of business, and they believe there was a perception among voters that the initiative would merely rein in short-term lending rather than end it.

“They made it sound like we would be able to stay in business, but they didn’t tell Montana voters that 800 jobs would be lost,” said Bethany Osborn, branch manager at National Quick Cash in Kalispell.

“Oh yes, I’m definitely going to lose my job,” Osborn said. “Basically, I’m trying to look for new work already. I’m starting to panic. I have a baby due in April.”

Gould said she still is lending but stressing to customers that it will come to an end after Dec. 31.

“Right now, I just can’t walk out and bail on my customers. They’re depending on us,” she said.

“I don’t know where they think these people will go,” Gould said. “If they were concerned about the consumer they would have never done this ... I just think the whole thing is a travesty.”

The initiative also is impacting businesses that lend larger amounts for longer terms, as long as they are secured with vehicle titles.

That is putting some customers in a real bind, because some title lenders are calling loans due over the next few months.

“Our customers are really upset ... They’ll have to pay off their debts in six months, and they are unhappy with Christmas coming up,” said Stephanie Norris of Title Cash of Kalispell.

Norris said three employees will lose their jobs and there will be similar job losses at about a dozen other Title Cash branches in Montana.

“We are massively effected by it,” she said. “I’m going to lose my job any day now.”

After 13 years in business, Kalispell Title Loans is among the other short-term local lenders that will close by the end of the year.

Reporter Jim Mann may be reached at 758-4407 or by e-mail at jmann@dailyinterlake.com.