Grant program for low-cost alternatives to payday loans

(a)

Short title

This section may be cited as the

Low-Cost Alternatives to Payday Loans Act

. (b)

Definitions

In this Act: (1)

Community development financial institution

The term community development financial institution means any organization that has been certified as a community development financial institution pursuant to section 1805.201 of title 12, Code of Federal Regulations. (2)

Federally insured depository institution

The term federally insured depository institution means any insured depository institution (as defined in section 3 of the Federal Deposit Insurance Act (12 U.S.C. 1813)) or any insured credit union (as defined in section 101 of the Federal Credit Union Act (12 U.S.C. 1752)). (3)

Payday loan

The term payday loan means any transaction in which a small cash advance is made to a consumer in exchange for— (A)the personal check or share draft of the consumer, in the amount of the advance plus a fee, where presentment or negotiation of such check or share draft is deferred by agreement of the parties until a designated future date; or (B)the authorization of the consumer to debit the transaction account or share draft account of the consumer, in the amount of the advance plus a fee, where such account will be debited on or after a designated future date. (c)

Establishment of program

The Secretary of the Treasury (referred to in this Act as the Secretary) is authorized to award demonstration project grants (including multi-year grants) to eligible entities to provide low-cost, small loans to consumers that will provide alternatives to more costly, predatory payday loans. (d)

Eligible entities

An entity is eligible to receive a grant under this Act if such an entity is— (1)an organization described in section 501(c)(3) of the Internal Revenue Code of 1986 and exempt from tax under section 501(a) of such Code; (2)a federally insured depository institution; (3)a community development financial institution; or (4)a partnership comprised of 1 or more of the entities described in paragraphs (1) through (3). (e)

Application

An eligible entity desiring a grant under this Act shall submit an application to the Secretary in such form and containing such information as the Secretary may require. (f)

Terms and conditions

(1)

Percentage rate

For purposes of this Act, an eligible entity that is a federally insured depository institution shall be subject to the annual percentage rate promulgated by the National Credit Union Administration's Loan Interest Rates under part 701 of title 12, Code of Federal Regulations in connection with a loan provided to a consumer pursuant to this Act. (2)

Financial literacy and education opportunities

Each eligible entity awarded a grant under this Act shall offer financial literacy and education opportunities, such as relevant counseling services or educational courses, to each consumer provided with a loan pursuant to this Act. (g)

Limitation on administrative costs

Each eligible entity awarded a grant under this Act may use not more than 6 percent of the total amount of such grant in any fiscal year for the administrative costs of carrying out the programs funded by such grant in such fiscal year. (h)

Evaluation and report

For each fiscal year in which a grant is awarded under this Act, the Secretary shall submit a report to Congress containing a description of the activities funded, amounts distributed, and measurable results, as appropriate and available. (i)

Regulations

The Secretary is authorized to promulgate regulations to implement and administer the grant program under this Act. (j)

Authorization of appropriations

There is authorized to be appropriated to the Secretary, for the grant program described in this Act, such sums as may be necessary, which shall remain available until expended.