Alabama Extends Cash Advance Loan Ban

birmingham seal
In Alabama, the Birmingham City Council voted to extend a ban on the opening of new cash advance loan, title loan and pawn businesses within city limits.

The first moratorium on these lending businesses was created in December of 2011. Councilwoman Lashunda Scales was the mastermind of this initiative and claimed that the city was already overfilled with these types of lenders, which strangle more positive commercial development.

“We’re trying to come up with law that would allow the number of payday lending and title lending institutions in the city. We’re looking for a permanent solution,” Scales told

Only one council member voted against the extension. However, another voiced support for Scales and the ban.

“They’ve been working on preying on our folks longer than we’ve had time to work on this ordinance. It takes longer than a year to carefully and deliberately address the issue,” said Councilman Steven Hoyt, according to

Cash advance loan lenders, along with their trade association, Borrow Smart, have argued that they provide a necessary service that is unfairly characterized as being harmful to city development and residents.

The lenders may have a point: Scales has long been an ardent critic of the cash advance loan industry. She has often accused them of preying on vulnerable residents as well as forcing borrowers into cycles of debt. Additionally, Scales believes that many lenders operate together in locations that make it difficult for other businesses to locate in those areas.

“The moratorium allows the city to develop a strategy that works best for the city, its citizens and industry involved,” said Scales.

The lending industry sent a representative to the meeting who spoke following the moratorium vote.

The Birmingham ban was actually based on a similar on in Midfield which also limited cash advance loan lenders within city limits.