SSB 6250
In CommitteeSenate
Small loans maximum amount
Concerning the maximum principal amount of small loans.
This status may be delayed. See Action History below for the latest updates.
How does a bill become law?
- Introduced: The bill is filed and assigned a number.
- Committee: A subject-matter committee holds hearings, takes public testimony, and decides whether to advance the bill.
- Floor Vote: The full chamber (House or Senate) debates and votes on the bill.
- Opposite Chamber: The bill repeats the committee and floor vote process in the other chamber.
- Governor: The Governor reviews the bill and decides whether to sign or veto it.
- Signed: The bill has been signed into law.
AI Analysis
This bill raises the maximum small loan amount from $700 to $1,200 (adjusted for inflation), tightens limits on repeat borrowing and loan frequency, and caps interest and fees more precisely across multiple loans. It also updates rules for loan terms, default restrictions, and collateral requirements to better protect borrowers while allowing lenders to operate under clearer, updated standards.
- The maximum amount a borrower can owe across all small loans at one time is raised from $700 to $1,200, adjusted annually for inflation starting January 1, 2027, using the Seattle-area consumer price index.
- Lenders may not make a small loan to a borrower who is in default on another small loan until the prior loan is paid in full or two years have passed since the original loan was made.
- Borrowers may receive no more than eight small loans from all lenders combined in any 12-month period.
- Interest and fees are capped at 15% of the first $500 of loan principal and 10% of any amount over $500, applied across all loans to a single borrower at one time.
- Loans must be due on or after the borrower’s next pay date (or second pay date if the next pay is within 7 days), and the loan term may not exceed 45 days unless extended by mutual agreement and without added fees or interest.
Who is affected
- Small loan borrowers — Borrowers who seek small, short-term loans (often called payday loans) will be subject to stricter limits on how much they can borrow, how often they can borrow, and how much lenders can charge.
- Small loan lenders — Lenders who offer small loans (such as payday lenders or check cashers with small loan endorsements) must comply with new borrowing limits, fee caps, and recordkeeping requirements.
- Department of Financial Institutions — The agency responsible for regulating small loan lenders and enforcing consumer protections in Washington State.
- Low- and moderate-income residents — Consumers who rely on frequent small loans for short-term cash needs may face tighter access to credit, especially those with low or irregular incomes.
Pro/Con Analysis
Stronger case for benefits
Potential Benefits (5)
Capping total outstanding debt at $1,200 (inflation-adjusted) and limiting loans to 8/year prevents borrowers from falling into cycles of repeated borrowing — protecting low- and moderate-income residents from escalating fees and debt traps that can persist for months or years.
FinancialPeopleRef: RCW 31.45.073(2)(a)Prohibiting lenders from making new loans to borrowers in default (until paid or 2 years pass) reduces the risk of repeated rollovers and hidden fees — a common predatory practice that traps vulnerable borrowers in long-term debt.
FinancialPeopleRef: RCW 31.45.073(2)(a)The aggregate fee cap (15% on first $500, 10% on remainder) ensures transparency and predictability in borrowing costs — preventing lenders from layering fees across multiple loans to exceed effective APRs of 200%+.
FinancialPeopleRef: RCW 31.45.073(5)Limiting loan terms to ≤45 days (unless extended without added cost) discourages long-term dependency on short-term credit — reducing the likelihood of chronic financial distress and associated public service costs (e.g., emergency shelter, mental health crisis response).
Public SafetyPeopleRef: RCW 31.45.073(2)(a)Annual inflation adjustment using Seattle-area CPI helps preserve the real value of the loan cap — preventing erosion of purchasing power over time, though Seattle-area CPI may overstate inflation for rural borrowers and could reduce access in lower-cost regions.
FinancialLean peopleRef: RCW 31.45.073(2)(b)
Potential Concerns (5)
Raising the loan cap to $1,200 and allowing up to 8 loans/year may increase demand for small-loan services, supporting lending institutions’ revenue and employment — but this is offset by stricter limits on repeat borrowing and fee caps, which reduce per-loan profitability, especially for high-volume, low-margin lenders.
Business & EmploymentLean industryRef: RCW 31.45.073(2)(a)By limiting borrowers to 8 loans/year and capping fees at 15%/$500 + 10%/$700, the bill reduces short-term credit access for low-income residents facing income volatility — potentially increasing risk of eviction or utility shutoffs if they cannot cover unexpected expenses without repeated short-term borrowing.
HousingPeopleRef: RCW 31.45.073(2)(a)The 8-loan-per-year cap may prevent some borrowers from managing recurring shortfalls (e.g., irregular work, medical co-pays), forcing reliance on costlier alternatives like overdrafts, credit cards, or informal lenders — increasing financial instability for households living paycheck to paycheck.
FinancialPeopleRef: RCW 31.45.073(4)Stricter borrowing limits may reduce debt-related stress and financial desperation, potentially lowering incidents of crime or mental health crises linked to predatory debt — but evidence for this causal pathway is indirect and not demonstrated in the bill text.
Public SafetyLean peopleRef: RCW 31.45.073(2)(a)The fee cap (15% on first $500, 10% on remainder) significantly reduces lender revenue per loan — especially for borrowers needing $1,000+ — which may lead lenders to exit the market, reducing access to formal credit and increasing reliance on unregulated or illegal lenders.
FinancialPeopleRef: RCW 31.45.073(5)
Who Is Most Affected
Low-income borrowers who rely on small loans to cover emergencies (e.g., car repairs, medical co-pays) will benefit from reduced debt traps and fee caps, but may face tighter credit access during income gaps — especially if they need more than 8 loans/year or amounts above $1,200.
Payday and small-loan lenders (especially those operating on thin margins) will see reduced per-loan revenue and stricter operational rules — potentially forcing consolidation or exit from the market, while larger, well-capitalized lenders may adapt more easily.
The Department of Financial Institutions gains clearer authority and standardized rules for enforcement, reducing regulatory ambiguity — but may face increased enforcement burden due to new reporting and compliance requirements.
Rural and non-metropolitan borrowers may be disproportionately affected if lenders concentrate in higher-income urban areas (where Seattle CPI applies), reducing physical or digital access to formal credit and increasing reliance on unregulated alternatives.
Financial institutions offering broader services (e.g., credit unions, banks with small-loan divisions) may benefit from increased consumer trust and market share as predatory lenders exit — but only if they expand small-loan offerings, which is uncertain.