House Bill 5140 (sHB5140 File No. 167) amends the definition of "small loan" in section 36a-555 of the 2024 supplement to the general statutes to include loans or advances of money based on future potential income, such as future pay or tax refunds, up to $50,000 with an APR greater than twelve percent, while excluding wages paid directly by an employer to an employee before payday. The bill also exempts payroll service providers from licensure requirements when they verify available earnings for employer-integrated advances, provided they do not fund the advances or control the lender's activities. It adds a new subsection (i) to section 36a-558, outlining conditions for enforceable small loans and voiding loans with inconsistent conditions, except in cases of bona fide error or loans made to non-Connecticut borrowers.

Furthermore, the bill outlines prohibited and permissible provisions in small loans, including payment schedules, prepayment penalties, call provisions, security interests, fees, and charges, while setting conditions for late fees, dishonored check charges, deferral charges, interest accrual, attorney's fees, credit insurance, and security interests in motor vehicles. It regulates open-end small loans, including principal amounts, payment computation, interest compounding, annual fees, and credit insurance, and sets rules for lead generation activities. The bill also exempts employer-integrated advances from APR and finance charge regulations, defines them, sets a maximum expedited transfer fee, and prohibits additional charges for late repayment. It exempts payroll service providers from licensure when verifying earnings for these advances and clarifies that wages paid by employers before payday are not subject to small loan laws. The bill is effective upon passage and amends sections 36a-555(11), 36a-557(a), and 36a-558, with a potential minimal revenue gain from increased small loan license applications.