The effort to change state laws around payday loans really hasn’t made much, if any, progress over the past number of years.

But a reform bill heard last week, backed by consumer advocates and some lenders, may be the best chance ? albeit small ? that payday loan reform has seen in Kansas for a while.

“It has more positives than any of the ones that I can remember seeing before,” said Rep. Jim Kelly, R-Independence, who has chaired the Kansas House’s financial institutions committee for many years. “This is one that I think is more workable than some of the ones that have come over the past years that I’ve been here.”

Payday loans are relatively small amounts of money lent at high rates of interest, with the expectation it gets repaid when the next paycheck comes around.

Critics have portrayed these loans as predatory against low-income people who are under duress, as some may get stuck with high-interest debt

Besides informational hearings, the last time an actual bill on this matter was filed was in 2017. Kelly had leaned away from pushing payday loan legislation, even as recently as last year.

“We as a committee . we’re committed to see if we can come up with a some type of compromise between this year and next,” the representative told The Topeka Capital-Journal. The payday loan companies and others “also have given us their nods that they’re willing to sit down with us and see if we can make something happen.”

Part of why this bill is more appealing is because it is already a compromise between lenders and consumer advocates, said Nick Bourke, consumer finance director at Pew Charitable Trusts.

Currently, payday loans can’t exceed $500, can have a maximum monthlong term and must be repaid in a single payment. Interest rates and other terms are worked out between the borrower and lender. It is a structure critics say leads to repeat borrowing and inability to repay.

“This current average interest rate on a payday loan is 391 percent. 391 percent!” said Moti Rieber, of Kansas Interfaith Action in written testimony. “In our system we expect lenders to charge interest, but the unregulated and astronomical interest rates charged by the predatory loan industry fall into the definition of ‘usury.’ “

House Bill 2189 would establish a new structure where payments are made using installments over a minimum period of three months, “by far the safest structure for consumers,” said Tony Huang, payday loans in Youngstown CEO of Possible Finance.

The bill also puts a 36% cap on interest rates, and in return, lending companies can increase their fees and loan out more than usual. There could be a $30 maximum monthly fee and up to $25 in underwriting fees. One can loan up to $2,500, far more than other states.

That 36% rate also incentivizes installment loan companies such as Possible Finance to come to Kansas. Small-installment businesses under current law are stuck at offering 21% interest rates or less.

“Kansas . requires extremely low rates for the safest type of loans – installment loans,” said Huang. “HB 2189 would harmonize those statutes and allow enough revenue for us to operate profitably, much like we do in Ohio.”

But a few payday loan companies like Speedy Cash still say this new structure and cap could put them out of business.

“HB 2189 eliminates the payday loan product and provides for small dollar loans under $2,500 only to the most credit worthy of near prime borrowers. (The new structure) to risky borrowers is not a viable business model,” said Melissa Soper, representing Speedy Cash.

She mentioned that for states who have enacted similar reform, Speedy Cash has had to withdraw products or operations out of those states.

“Kansas consumers are qualified to make financial decisions for themselves without government interference. Who is to say whether it is better for a borrower to take out a loan to meet a short-term need vs. the consequences of not taking out a loan?” said Whitney Damron, of the Kansas Community Financial Services Association.

He said he would lean toward a best-of-both-worlds option, where there is the bill’s installment structure and the current structure payday lenders operate under (or at least a structure with which payday lenders would be comfortable).

“My concern is that it’s not a product that some people would qualify for,” Kelly said. “If there’s no other avenue for them, then you get into the back-alley lending and you get into situations that are not favorable.”

And once you allow the borrower to repay in affordable installments over time, you also enable larger loans,” Bourke said

If reform ever passes, it likely will be next session, when unpassed bills from this year roll over into, rather than this session. This hearing is a good first step, said Kelly.

“Rarely have has there been an actual hearing” on this subject, he added. “We had an actual hearing this year that would put us in a position to look for compromise, and that could gain support and try to move something past the hearing.”