Payday lenders may close stores in Ohio

Two companies that employ about 2,200 workers in Ohio said Thursday 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," said company spokeswoman Yolanda Walker. "If we don't find an alternative, we will be forced to do so."

Walker said not all the company's 1,700 workers in Ohio would be affected if the stores close. For example, she said, the company employs about 200 workers at a Cincinnati call center that also serves other states.

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.

The announcements came 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.

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.

"We cannot operate under the 28 percent," Walker said. "We have employees. We have buildings. This is a prohibition bill, really."

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

If no suitable alternative product is found, Cash America said it expects its Ohio locations to begin closing as early as mid-August, depending upon when the bill is signed into law.

Howard Wagner, 46, of Peebles, opposes the state imposing restrictions on the centers, saying they perform a valuable service.

He said he recently cashed a $2,300 insurance check at one of the lending centers and was charged about $150.

"We didn't have the amount in our bank account to cover how much the check was so we had no choice but to go there and give them the money to cash the check," he said. "We needed the money right now. We couldn't deposit it and wait 10 days to get the money."