The Florida Senate
BILL ANALYSIS AND FISCAL IMPACT STATEMENT
(This document is based on the provisions contained in the legislation as of the latest date listed below.)
Prepared By: The Professional Staff of the Committee on Fiscal Policy
BILL: CS/SB 580
INTRODUCER: Banking and Insurance Committee and Senator Gruters
SUBJECT: Consumer Finance Loans
DATE: April 24, 2023 REVISED:
ANALYST STAFF DIRECTOR REFERENCE ACTION
1. Knudson Knudson BI Fav/CS
2. Sanders Betta AEG Favorable
3. Knudson Yeatman FP Favorable
Please see Section IX. for Additional Information:
COMMITTEE SUBSTITUTE - Substantial Changes
I. Summary:
CS/SB 580 revises laws governing consumer finance loans, which are loans of $25,000 or less
for which a lender charges an interest rate greater than 18 percent per annum. The Florida
Consumer Finance Act (Act) in ch. 516, F.S., provides an exemption from Florida’s prohibition
against usurious contracts, under which any interest rate greater than 18 percent per annum is
prohibited.
Current law limits consumer finance loan interest rates to no more than 30 percent per annum,
computed on the first $3,000 of the principal amount; 24 percent per annum on that part of the
principal amount exceeding $3,000 and up to $4,000; and 18 percent per annum on that part of
the principal amount exceeding $4,000 and up to $25,000. The bill increases the maximum
interest rate that may be charged to 36 percent per annum.
The bill increases the number of days a payment must be in default before a delinquency charge
may be imposed from 10 days in default to 12 days in default.
The bill revises the licensure process to allow a single licensure application for the principle
place of business and all branches. The bill defines a “branch” as any location, other than a
licensee’s principal place of business, at which a licensee operates or conducts consumer finance
loan business or controls for the purpose of conducting consumer finance loan business.
BILL: CS/SB 580 Page 2
The bill requires consumer finance lenders, in any county designated in a Federal Emergency
Management Agency (FEMA) major disaster declaration, to suspend for 90 days after the initial
date of such declaration, the following:
 The application of delinquency charges for payments in default for at least 10 days;
 Repossessions of collateral pledged to a consumer finance loan; and
 The filing of civil actions for the collection of amounts owed under a consumer finance loan.
The bill also requires consumer finance lenders to:
 Provide notice to the Office of Financial Regulation (OFR) of any assistance program offered
by the lender to borrowers impacted by a disaster subject to a FEMA major disaster
declaration; and
 Annually report information to the OFR detailing loans issued by the lender during the
previous calendar year.
The OFR estimates a recurring reduction of $5,000 in revenues but the loss is negligible and
would not impact operations. Furthermore, the reduction in staff time reviewing full license
applications for each additional location when replaced with a branch office license would likely
offset any loss in revenue. In addition, the changes proposed within the bill would require the
OFR to update its internal licensing system to create a branch license and annual reporting
functionality. The cost of such technology changes would be negligible and can be absorbed
within existing resources.
The effective date of the bill is July 1, 2023.
II. Present Situation:
The OFR’s Division of Consumer Finance (Division) licenses and regulates non-depository
financial service entities and individuals, and conducts investigations of licensed entities to
determine their compliance with Florida law.1 One such product regulated by the OFR is
consumer finance loans.
A consumer finance loan is a loan of money, credit, goods, or interests valued at $25,000 or less
with permitted interest rates between 18 and 30 percent per year.2 A consumer finance loan is not
a traditional loan made by a bank, credit union, or similar institution. The consumer finance
lenders do not accept deposits, and earn their revenue from the fees charged on the loans they
make.3
1
Fla. Office of Fin. Reg., Division of Consumer Finance: What We Do,
https://flofr.gov/sitePages/DivisionOfConsumerFinance.htm (last visited April 6, 2023).
2
Sections 516.01(2) and 516.031(1), F.S. See also, Fla. Office of Fin. Reg, Consumer Finance Companies,
https://flofr.gov/sitePages/ConsumerFinanceCompanies.htm (last visited April 6, 2023).
3
Naveen Reddy, What are the Primary Functions of Finance Companies? (Nov. 9, 2020),
https://smallbusiness.chron.com/primary-functions-finance-companies-40480.html (last visited April 6, 2023). Also note,
payday lenders are separately regulated pursuant to ch. 560, F.S.
BILL: CS/SB 580 Page 3
Licensure
Entities that engage in the business of making consumer finance loans must be licensed by the
OFR pursuant to the Florida Consumer Finance Act, ch. 516, F.S. (“the Act”). Each location of a
consumer finance lender must be separately licensed, even if the separate locations are operated
by the same business entity.4
A consumer finance lender applicant must submit an application fee of $625 and an investigation
fee of $200 with its application for licensure.5 Consumer finance lender licenses granted under
the Act must be renewed every two years, at which time the licensee must pay a $625 biennial
license fee.6
The Act does not apply to persons doing business under state or federal laws governing banks,
savings banks, trust companies, building and loan associations, credit unions, or industrial loan
and investment companies.7
Permissible Interest Rates and Fees
Florida’s prohibition on usury8 generally prohibits9 interest rates in excess of 18 percent per
annum simple interest on any loan, advance of money, line of credit, or forbearance. 10 Licensed
consumer finance lenders, however, may offer interest rates greater than 18 percent per annum
simple interest, up to the following limits, which are based on the amount of the loan’s
principal:11
 30 percent on the first $3,000;
 24 percent on principal above $3,000 and up to $4,000; and
 18 percent on principal above $4,000 and up to $25,000.
The Act prohibits lenders from directly or indirectly charging borrowers additional fees as a
condition to the grant of a loan, except for the following:12
 Up to $25 for investigating the credit and character of the borrower;
 A $25 annual fee on the anniversary date of each line-of-credit account;
 Brokerage fees for certain loans, title insurance, and appraisals of real property offered as
security;
4
Sections 516.01(6) and 516.05(3), F.S.
5
Section 516.03(1), F.S. See also, Fla. Office of Fin. Reg., Form OFR-516-01 Application for Consumer Finance Company
License, https://flofr.gov/sitePages/documents/OFR-516-01.pdf (last visited April 6, 2023).
6
Sections 516.03(1) and 516.05(1) & (2), F.S.
7
Section 516.02(4), F.S.
8
Usury is the act of lending money at an interest rate that is considered unreasonably high or that is higher than the rate
permitted by law. Julia Kagan, Investopedia, What is Usury? Definition, How It Works, Legality, and Example
(February 7, 2022), https://www.investopedia.com/terms/u/usury.asp (last visited April 11, 2023). See ss. 687.02 and
687.03, F.S.
9
Various lenders and credits licensed or chartered under the laws of the United States or specified chapters of the Florida
Statutes may charge interest at the maximum rate of interest permitted by law for similar loans or extensions of credit.
See s. 687.12(1), F.S.
10
Sections 687.02 and 687.12, F.S.
11
Section 516.031(1), F.S.
12
Section 516.031(3), F.S.
BILL: CS/SB 580 Page 4
 Intangible personal property tax on the loan note or obligation, if secured by a lien on real
property;
 Documentary excise tax and lawful fees for filing, recording, or releasing an instrument
securing the loan;
 The premium for any insurance in lieu of perfecting a security interest otherwise required by
the licensee in connection with the loan;
 Actual and reasonable attorney fees and court costs;
 Actual and commercially reasonable expenses for repossession, storing, repairing and placing
in condition for sale, and selling of any property pledged as security;
 A delinquency charge for each payment in default for at least 10 days, if agreed upon in
writing before the charge is imposed, of up to $15 for payments due monthly, $7.50 for
payments due semimonthly or every two weeks, and five dollars if three payments are due in
the same calendar month; and
 A bad check charge of up to $20.
A consumer finance lender may offer optional credit property, credit life, and disability
insurance at the borrower’s expense via a deduction from the principal amount of the loan.13
Licensees under ch. 516, F.S., are expressly prohibited from charging prepayment penalties on
consumer finance loans.14
Federal Emergency Management Agency
Robert T. Stafford Disaster Relief and Emergency Assistance Act15 (Stafford Act)
Under the Stafford Act, Public Law No. 100-107, the President of the United States is authorized
to declare emergency and major disaster declarations. An emergency declaration can be declared
for any occasion or instance the President determines federal assistance is needed. Emergency
declarations supplement state and local or Indian tribal emergency service efforts, which include
protection of lives, property, public health and safety or lessens the threat of a catastrophe in any
part of the United States.16 Assistance provided under an emergency declaration may not exceed
five million dollars. The President can declare a major disaster for any natural event17 which the
President has determined has caused severe damage beyond the combined capabilities of state
and local governments to respond.18 Such declaration of a major disaster provides federal
13
Section 516.35(2), F.S.
14
Section 516.031(6), F.S.
15
The Stafford Act constitutes the statutory authority for most Federal disaster response activities, especially as related to the
FEMA and FEMA programs. PL 100-707 (November 23, 1988); amended the Disaster Relief Act of 1974, PL 93-288.
https://www.fema.gov/disaster/stafford-act (last visited April 11, 2023).
16
FEMA, How a Disaster Gets Declared, Emergency Declarations, https://www.fema.gov/disaster/how-declared (last visited
April 11, 2023).
17
Natural events include hurricanes, tornadoes, storms, high water, wind-driven water, tidal waves, tsunamis, earthquakes,
volcanic eruptions, landslides, snowstorms, mudslides, or drought, or regardless of cause, fire, flood or explosion. FEMA,
How a Disaster Gets Declared, Major Disaster Declarations, https://www.fema.gov/disaster/how-
declared#:~:text=The%20President%20can%20declare%20a,that%20the%20President%20determines%20has (last visited
April 11, 2023).
18
Id.
BILL: CS/SB 580 Page 5
assistance programs to individuals and public infrastructure, including emergency and permanent
work.19
Before such declaration can be determined, the governor of a state or Tribal Chief Executive of
the affected Tribe must submit a request, within thirty days of the occurrence, to the President
through a FEMA Regional Administrator. Federal assistance is determined by the Governor’s or
Tribal Chief’s request and the needs identified during preliminary damage assessments.20
III. Effect of Proposed Changes:
CS/SB 580 revises laws governing consumer finance loans, which are loans of $25,000 or less
for which a lender charges an interest rate greater than 18 percent per annum. The Florida
Consumer Finance Act (Act) in ch. 516, F.S., provides an exemption from Florida’s prohibition
against usurious contracts, under which any interest rate greater than 18 percent per annum is
prohibited.
Section 1 amends s. 516.01, F.S., to define the term “branch” to mean any location, other than a
licensee’s principal place of business, at which a licensee operates or conducts business under
this chapter or which the licensee owns or controls for the purpose of conducting consumer
finance loan business.
Section 2 amends s. 516.02, F.S., to clarify a person must not engage in the business of making
consumer finance loans or operate a branch of such a business unless first authorized to do so.
Section 3 amends s. 516.03, F.S., to revise the licensure process to allow a single licensure
application for the principal place of business and all branches. The bill provides applications for
a license for the principal place of business to be accompanied by a nonrefundable investigation
fee of $200.
Section 4 amends s. 516.031, F.S., to increase the maximum interest rate that may be charged to
36 percent per annum. Current law limits consumer finance loan interest rates to no more than
30 percent per annum, computed on the first $3,000 of the principal amount; 24 percent per
annum on that part of the principal amount exceeding $3,000 and up to $4,000; and 18 percent
per annum on that part of the principal amount exceeding $4,000 and up to $25,000.
The bill removes language related to calculation of two or more interest rates applied to a
principal amount.
Section 4 also increases the number of days a payment must be in default before a delinquency
charge may be imposed from 10 days in default to 12 days in default.
Relating to disaster relief and suspension of penalties, Section 5 amends s. 516.15, F.S., and
Section 7 creates s. 516.39, F.S., to require consumer finance lenders, in any county designated
19
Id.
20
Id.
BILL: CS/SB 580 Page 6
in a FEMA major disaster declaration, to suspend the following for 90 days after the initial date
of such declaration:
 The application of delinquency charges for payments in default for at least 10 days;
 Repossessions of collateral pledged to a consumer finance loan; and
 The filing of civil actions for the collection of amounts owed under a consumer finance loan.
The bill also requires consumer finance lenders to provide notice to the OFR of any assistance
program offered by the lender to borrowers impacted by a disaster subject to a FEMA major
disaster declaration.
Section 6 creates s. 516.38, F.S., to require consumer finance licensees to annually report, by
March 15, and beginning March 14, 2024, aggregated and anonymized data that does not
reference any borrower’s nonpublic personal information to the OFR detailing the loans issued
by the lender during the previous calendar year. The report must include:
 The number of locations held by the licensee as of December 31;
 The number of loan originations by the licensee under all licenses;
 The total dollar amount of loans and the number of loans outstanding by the licensee as of
December 31;
 The total number of loans in which the licensee holds a security interest in collateral as of
December 31;
 The total number of unsecured loans as of December 31;
 The total number of loans, separated by principal amount, in the following ranges as of
December 31:
o Up to and including $5,000;
o $5,001 to $10,000;
o $10,001 to $15,000;
o $15,001 to $20,000; and
o $20,001 to $25,000;
 The total number and amount of loans charged off as of December 31; and
 The total dollar amount of loans and the number of loans with delinquency status listed as:
o Current or less than 30 days past due;
o From 30 to 59 days past due;
o From 60 to 89 days past due; and
o At least 90 days past due.
Furthermore, licensees claiming any information submitted in the annual report contains a trade
secret must submit to the OFR an affidavit and designate the information claimed to be a trade
secret in accordance with s. 655.0591, F.S. The OFR may publish a re