City Council Talks Tough
 

Birmingham City Council had a moratorium (an authorised suspension of activity) that prevents payday loan lenders from setting up their business within the city. The deadline for the moratorium is June 2014 but the City Council has decided to extend the deadline further in order to strap new regulatory laws into place.

Lashunda Scales, Councilwoman for Birmingham said that the new laws would be applicable to payday loans as well as pawn title loans. She said that the primary objective of the new regulations would be to discourage the unprecedented growth of payday loan lending like websites cushteecash.co.uk. Lashunda Scales, who is sponsoring the proposed ordinance, explained that the payday loan industry was adversely affecting the poorer families and communities living in Alabama.
 

Strong Reaction from Lending Sector
 

Needless to add, the lending industry is strongly opposing the move which they perceive as unfair and biased. Scales labelled the proposed law aimed at consolidating the local economy as well as protecting consumers from exploitative lending practices.

The moratorium has been in place for nearly two years as City Council members discuss long-term measures to curb unscrupulous lending practices in the state. One of the proposed measures includes a geographical distance of at least 2000 to 5000 feet between one payday storefront business and the next. However, keeping in mind the practicalities, the new laws will not apply to existing businesses.

According to the original moratorium, planning and zoning professionals would work out solutions to spread out the lending businesses through the city of Birmingham. This way, the new laws would be ready to implement once the moratorium was lifted.

Borrow Smart Alabama proprietor, Max Wood alleged that the moratorium was unfairly targeting payday loan lenders who operated storefront businesses. He added that the real problem was not with bricks-and-mortar payday loan lenders but those plied their business online.

Most payday loans are advertised at rates of 17.5% but when calculated on an annual basis, the interest rates were nearly 460%. According to the Centre for Responsible Lending, Birmingham has no regulatory laws regarding payday loans and it's the City Council took some proactive action in this regard. City Council members have voted to extend the moratorium on payday loan lenders for another 6 months.

Councilwoman Scales also added that payday loan lenders were impeding positive commercial development as their businesses are aimed at capitalising on the financial difficulties of people. The borrowers were frequently left in dire straits and they rapidly slid into an unending spiral of debt.