The bill amends RCW 31.45.073 to update regulations surrounding small loans in Washington State. It establishes that the maximum principal amount for small loans is now set at $1,200, adjusted for inflation based on the consumer price index, or 30 percent of the borrower's gross monthly income, whichever is lower. Additionally, the bill stipulates that the maximum loan term cannot exceed 45 days unless both the borrower and licensee agree to an extension without additional fees or interest. The Department of Financial Institutions is tasked with biennially determining the inflation-adjusted maximum loan amount starting January 1, 2027.

Other provisions include restrictions on borrowers receiving more than eight small loans within a 12-month period and limitations on interest and fees charged by licensees. Specifically, licensees can charge up to 15 percent on the first $500 of principal and 10 percent on any amount exceeding that. The bill also clarifies that licensees may only accept a postdated check as collateral for small loans and prohibits them from making loans to borrowers who are in default on another small loan until the previous loan is fully paid or two years have passed.

Statutes affected:
Original bill: 31.45.073
Substitute bill: 31.45.073