Bill Sponsors
Raptakis, Thompson, Gu, Patalano, Murray, Burke, Quezada, LaMountain, McKenney, and Sosnowski
Committee
Senate Commerce
Summary
Select
This legislation amends Rhode Island's laws regarding lenders and loan brokers by removing specific exemptions for licensing. Previously, individuals or entities making fewer than six loans within a twelve-month period were exempt from state licensing requirements; this bill removes that exemption, requiring them to be licensed. Furthermore, it removes an exemption that allowed check-cashing businesses to engage in payday lending (deferred deposit transactions) without holding a separate lender's license. The bill aims to bring these previously exempt financial activities under the regulatory oversight of the state.
Sponsor
Analysis
Pros for Progressives
- Increases regulatory oversight on small-volume lenders, preventing predatory actors from operating under the radar to exploit vulnerable borrowers.
- Closes a loophole that allowed check-cashing businesses to offer high-interest payday loans without the specific scrutiny and standards required of licensed lenders.
- Standardizes consumer protections by ensuring that all entities issuing loans are subject to the same state laws and licensing requirements, regardless of volume.
Cons for Progressives
- Could inadvertently penalize informal community lending circles or mutual aid networks if they technically fall under the definition of making "loans" without a license.
- May drive the demand for small, short-term loans into completely unregulated, illegal markets if legitimate small lenders exit the market due to licensing costs.
- Focuses on licensing rather than explicitly capping interest rates or fees, which means the underlying issue of high-cost debt traps may persist despite licensure.
Pros for Conservatives
- Ensures a level playing field for businesses by removing special carve-outs, forcing small lenders and check cashers to compete under the same rules as established banks.
- Upholds the rule of law by closing loopholes that allowed certain financial transactions to bypass standard legal frameworks and oversight.
- Potentially increases state revenue through the collection of licensing fees from entities that were previously operating tax-free or fee-free regarding their lending activities.
Cons for Conservatives
- Expands government bureaucracy and red tape by forcing private individuals and small business owners to navigate complex licensing procedures.
- Infringes on the free market and individual liberty by restricting the right of private citizens to lend their own money without government permission.
- Likely increases operational costs for small businesses and check cashers, which will inevitably be passed down to the consumer in the form of higher fees.
Constitutional Concerns
None Likely
Impact Overview
Groups Affected
- Small-volume lenders
- Check cashing businesses
- Payday loan borrowers
- Loan brokers
- Department of Business Regulation
Towns Affected
All
Cost to Taxpayers
None
Revenue Generated
Amount unknown
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Public Services
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Regulatory
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Privacy Impact
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Bill Status
Current Status
Held
Comm Passed
Floor Passed
Law
History
• 01/09/2026 Introduced, referred to Senate Commerce
Bill Text
SECTION 1. Section 19-14.1-10 of the General Laws in Chapter 19-14.1 entitled "Lenders and Loan Brokers" is hereby amended to read as follows:
19-14.1-10. Special exemptions. [Effective until January 1, 2027.] (a) The licensing provisions of chapter 14 of this title shall not apply to:
(1) Nonprofit charitable, educational, or religious corporations or associations;
(2)Any person who makes less than six (6) loans in this state in any consecutive twelve- month (12) period; there is no similar exemption from licensing for loan brokers for brokering loans or acting as a loan broker;
(3) Any person acting as an agent for a licensee for the purpose of conducting closings at a location other than that stipulated in the license;
(4) Regulated institutions and banks or credit unions organized under the laws of the United States, or subject to written notice with a designated Rhode Island agent for service of process in the form prescribed by the director, or the director’s designee, of any other state within the United States if the laws of the other state in which such bank or credit union is organized authorizes under conditions not substantially more restrictive than those imposed by the laws of this state, as determined by the director, or the director’s designee, a financial institution or credit union to engage in the business of originating or brokering loans in the other state; no bank or credit union duly organized under the laws of any other state within the United States may receive deposits, pay checks, or lend money from any location within this state unless such bank or credit union has received approval from the director, or the director’s designee, for the establishment of an interstate branch office pursuant to chapter 7 of title 19;
(5) Any natural person employee who is employed by a licensee when acting on the licensee’s behalf; provided that this exemption shall not apply to a mortgage loan originator required to be licensed under § 19-14-2 or § 19-14.10-4; or
(6) A licensed attorney when performing loan closing services for a licensee or for an entity identified in subdivision (4) above.
(b) The provisions of this chapter and chapter 14 of this title shall not apply to:
(1) Loans to corporations, joint ventures, partnerships, limited liability companies or other business entities;
(2) Loans over twenty-five thousand dollars ($25,000) in amount to individuals for business or commercial, as opposed to personal, family or household purposes;
(3) Loans principally secured by accounts receivable and/or business inventory;
(4) Loans made by a life insurance company wholly secured by the cash surrender value of a life insurance policy;
(5) Education-purpose loans made by the Rhode Island health and educational building corporation as vested in chapter 38.1 of title 45 of the Rhode Island student loan authority as vested in chapter 62 of title 16;
(6) The acquisition of retail or loan installment contracts by an entity whose sole business in this state is acquiring them from federal banks receivers or liquidators;
(7) Notes evidencing the indebtedness of a retail buyer to a retail seller of goods, services or insurance for a part or all of the purchase price;
(8) Any municipal, state or federal agency that makes, brokers, or funds loans or acts as a lender or a loan broker. This exemption includes exclusive agents or exclusive contractors of the agency specifically designated by the agency to perform those functions on behalf of the agency and which has notified the director, in writing, of the exclusive agency or contract; or
(9) Notes evidencing the indebtedness of a retail buyer to a retail motor vehicle dealer that include as part of the amount financed, disclosed in accordance with 12 C.F.R. § 226.18 as amended, an amount representing negative equity related to the motor vehicle being traded in as part of the purchase price of the motor vehicle being purchased.
(c) No license to make or fund loans, or to act as a lender or small loan lender shall be required of any person who engages in deferred deposit transactions (commonly known as “pay- day advance”) while holding a valid license to cash checks pursuant to chapter 14 of this title.
19-14.1-10. Special exemptions. [Effective January 1, 2027.] LC003453 - Page 2 of 5
(a) The licensing provisions of chapter 14 of this title shall not apply to:
(1) Nonprofit charitable, educational, or religious corporations or associations;
(2)Any person who makes less than six (6) loans in this state in any consecutive twelve- month (12) period; there is no similar exemption from licensing for loan brokers for brokering loans or acting as a loan broker;
(3) Any person acting as an agent for a licensee for the purpose of conducting closings at a location other than that stipulated in the license;
(4) Regulated institutions and banks or credit unions organized under the laws of the United States, or subject to written notice with a designated Rhode Island agent for service of process in the form prescribed by the director, or the director’s designee, of any other state within the United States if the laws of the other state in which such bank or credit union is organized authorizes under conditions not substantially more restrictive than those imposed by the laws of this state, as determined by the director, or the director’s designee, a financial institution or credit union to engage in the business of originating or brokering loans in the other state; no bank or credit union duly organized under the laws of any other state within the United States may receive deposits, pay checks, or lend money from any location within this state unless such bank or credit union has received approval from the director, or the director’s designee, for the establishment of an interstate branch office pursuant to chapter 7 of this title;
(5) Any natural person employee who is employed by a licensee when acting on the licensee’s behalf; provided that this exemption shall not apply to a mortgage loan originator required to be licensed under § 19-14-2 or § 19-14.10-4; or
(6) A licensed attorney when performing loan closing services for a licensee or for an entity identified in subdivision (4) above.
(b) The provisions of this chapter and chapter 14 of this title shall not apply to:
(1) Loans to corporations, joint ventures, partnerships, limited liability companies, or other business entities;
(2) Loans over twenty-five thousand dollars ($25,000) in amount to individuals for business or commercial, as opposed to personal, family, or household purposes;
(3) Loans principally secured by accounts receivable and/or business inventory;
(4) Loans made by a life insurance company wholly secured by the cash surrender value of a life insurance policy;
(5) Education-purpose loans made by the Rhode Island health and educational building corporation as vested in chapter 38.1 of title 45 of the Rhode Island student loan authority as vested in chapter 62 of title 16; LC003453 - Page 3 of 5
(6) The acquisition of retail or loan installment contracts by an entity whose sole business in this state is acquiring them from federal banks receivers or liquidators;
(7) Notes evidencing the indebtedness of a retail buyer to a retail seller of goods, services, or insurance for a part or all of the purchase price;
(8) Any municipal, state, or federal agency that makes, brokers, or funds loans or acts as a lender or a loan broker. This exemption includes exclusive agents or exclusive contractors of the agency specifically designated by the agency to perform those functions on behalf of the agency and which has notified the director, in writing, of the exclusive agency or contract; or
(9) Notes evidencing the indebtedness of a retail buyer to a retail motor vehicle dealer that include as part of the amount financed, disclosed in accordance with 12 C.F.R. § 226.18 as amended, an amount representing negative equity related to the motor vehicle being traded in as part of the purchase price of the motor vehicle being purchased.
(c) [Deleted by P.L. 2025, ch. 373, § 2 and P.L. 2025, ch. 391, § 2.]
SECTION 2. This act shall take effect upon passage.
19-14.1-10. Special exemptions. [Effective until January 1, 2027.] (a) The licensing provisions of chapter 14 of this title shall not apply to:
(1) Nonprofit charitable, educational, or religious corporations or associations;
(2)
(3) Any person acting as an agent for a licensee for the purpose of conducting closings at a location other than that stipulated in the license;
(4) Regulated institutions and banks or credit unions organized under the laws of the United States, or subject to written notice with a designated Rhode Island agent for service of process in the form prescribed by the director, or the director’s designee, of any other state within the United States if the laws of the other state in which such bank or credit union is organized authorizes under conditions not substantially more restrictive than those imposed by the laws of this state, as determined by the director, or the director’s designee, a financial institution or credit union to engage in the business of originating or brokering loans in the other state; no bank or credit union duly organized under the laws of any other state within the United States may receive deposits, pay checks, or lend money from any location within this state unless such bank or credit union has received approval from the director, or the director’s designee, for the establishment of an interstate branch office pursuant to chapter 7 of title 19;
(5) Any natural person employee who is employed by a licensee when acting on the licensee’s behalf; provided that this exemption shall not apply to a mortgage loan originator required to be licensed under § 19-14-2 or § 19-14.10-4; or
(6) A licensed attorney when performing loan closing services for a licensee or for an entity identified in subdivision (4) above.
(b) The provisions of this chapter and chapter 14 of this title shall not apply to:
(1) Loans to corporations, joint ventures, partnerships, limited liability companies or other business entities;
(2) Loans over twenty-five thousand dollars ($25,000) in amount to individuals for business or commercial, as opposed to personal, family or household purposes;
(3) Loans principally secured by accounts receivable and/or business inventory;
(4) Loans made by a life insurance company wholly secured by the cash surrender value of a life insurance policy;
(5) Education-purpose loans made by the Rhode Island health and educational building corporation as vested in chapter 38.1 of title 45 of the Rhode Island student loan authority as vested in chapter 62 of title 16;
(6) The acquisition of retail or loan installment contracts by an entity whose sole business in this state is acquiring them from federal banks receivers or liquidators;
(7) Notes evidencing the indebtedness of a retail buyer to a retail seller of goods, services or insurance for a part or all of the purchase price;
(8) Any municipal, state or federal agency that makes, brokers, or funds loans or acts as a lender or a loan broker. This exemption includes exclusive agents or exclusive contractors of the agency specifically designated by the agency to perform those functions on behalf of the agency and which has notified the director, in writing, of the exclusive agency or contract; or
(9) Notes evidencing the indebtedness of a retail buyer to a retail motor vehicle dealer that include as part of the amount financed, disclosed in accordance with 12 C.F.R. § 226.18 as amended, an amount representing negative equity related to the motor vehicle being traded in as part of the purchase price of the motor vehicle being purchased.
(c) No license to make or fund loans, or to act as a lender or small loan lender shall be required of any person who engages in deferred deposit transactions (commonly known as “pay- day advance”) while holding a valid license to cash checks pursuant to chapter 14 of this title.
19-14.1-10. Special exemptions. [Effective January 1, 2027.] LC003453 - Page 2 of 5
(a) The licensing provisions of chapter 14 of this title shall not apply to:
(1) Nonprofit charitable, educational, or religious corporations or associations;
(2)
(3) Any person acting as an agent for a licensee for the purpose of conducting closings at a location other than that stipulated in the license;
(4) Regulated institutions and banks or credit unions organized under the laws of the United States, or subject to written notice with a designated Rhode Island agent for service of process in the form prescribed by the director, or the director’s designee, of any other state within the United States if the laws of the other state in which such bank or credit union is organized authorizes under conditions not substantially more restrictive than those imposed by the laws of this state, as determined by the director, or the director’s designee, a financial institution or credit union to engage in the business of originating or brokering loans in the other state; no bank or credit union duly organized under the laws of any other state within the United States may receive deposits, pay checks, or lend money from any location within this state unless such bank or credit union has received approval from the director, or the director’s designee, for the establishment of an interstate branch office pursuant to chapter 7 of this title;
(5) Any natural person employee who is employed by a licensee when acting on the licensee’s behalf; provided that this exemption shall not apply to a mortgage loan originator required to be licensed under § 19-14-2 or § 19-14.10-4; or
(6) A licensed attorney when performing loan closing services for a licensee or for an entity identified in subdivision (4) above.
(b) The provisions of this chapter and chapter 14 of this title shall not apply to:
(1) Loans to corporations, joint ventures, partnerships, limited liability companies, or other business entities;
(2) Loans over twenty-five thousand dollars ($25,000) in amount to individuals for business or commercial, as opposed to personal, family, or household purposes;
(3) Loans principally secured by accounts receivable and/or business inventory;
(4) Loans made by a life insurance company wholly secured by the cash surrender value of a life insurance policy;
(5) Education-purpose loans made by the Rhode Island health and educational building corporation as vested in chapter 38.1 of title 45 of the Rhode Island student loan authority as vested in chapter 62 of title 16; LC003453 - Page 3 of 5
(6) The acquisition of retail or loan installment contracts by an entity whose sole business in this state is acquiring them from federal banks receivers or liquidators;
(7) Notes evidencing the indebtedness of a retail buyer to a retail seller of goods, services, or insurance for a part or all of the purchase price;
(8) Any municipal, state, or federal agency that makes, brokers, or funds loans or acts as a lender or a loan broker. This exemption includes exclusive agents or exclusive contractors of the agency specifically designated by the agency to perform those functions on behalf of the agency and which has notified the director, in writing, of the exclusive agency or contract; or
(9) Notes evidencing the indebtedness of a retail buyer to a retail motor vehicle dealer that include as part of the amount financed, disclosed in accordance with 12 C.F.R. § 226.18 as amended, an amount representing negative equity related to the motor vehicle being traded in as part of the purchase price of the motor vehicle being purchased.
(c) [Deleted by P.L. 2025, ch. 373, § 2 and P.L. 2025, ch. 391, § 2.]
SECTION 2. This act shall take effect upon passage.