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HomeNewsArchivesSenate Finance Committee Approves Changes to Small-Loan Rules

Senate Finance Committee Approves Changes to Small-Loan Rules

Jan. 15, 2008 — A bill that would allow more individuals to qualify for small loans got the thumbs up Tuesday from the Senate's Finance Committee, along with much support from representatives of the territory's small-loan companies.
Currently, small-loan companies can lend up to $7,500 to qualified borrowers, using an interest-rate formula 13 percent above the national prime-lending rate, with a floor of 19.5 percent and a rate cap of 26 percent. The bill, proposed by Sen. Louis P. Hill, removes the statutory link to prime lending rates and allows financing companies to price anywhere between the floor and cap.
It also increases the companies' maximum loan amount to $9,500 and adds a $25 application fee that can be charged for the processing of an individual's loan application, according to attorney George H.T. Dudley, representing First Express, one of the territory's two independent small-loan companies. Showing his support for the proposal, Dudley said the bill gives small-loan companies more flexibility, allowing them to focus on the "creditworthiness" of the borrower.
Amidst fluctuations in the economy, the $7,500 loan cap has remained in place for the past 14 years and has "eroded in value," Dudley added. Echoing his remarks, Hill said the raise to $9,500 would "clearly" give the consumer a "little more money to spend."
Voting in favor of the bill — which now goes onto the Rules and Judiciary Committee — were Sens. Liston Davis, Juan Figueroa-Serville and Ronald E. Russell. Sens. Terrence "Positive" Nelson and James Weber III voted against the bill, while Sens. Carlton "Ital" Dowe and Neville James were absent at voting time.
The next part of the meeting took an emotional turn, as representatives from three local businesses told senators that the local Education Department owes them money for maintenance and construction work performed up to 11 years ago.
"You might not really understand the pain and the agony that we go through," said George H. Silcott, president of Silcott's Construction Enterprises. Silcott contended that while former Gov. Charles W. Turnbull had previously identified the $306,556 owed to the company for repairs and renovations to the department's business and administration building, none of the money has actually been dispersed.
"At the same time we're out there assisting the government, it's costing us money," Silcott added. "When you take the lifeblood from the small businessman here, you kill the community. The government called on us and we rose to the occasion — I don't think you could have gotten anyone to do a better job."
In a letter read into the record during Tuesday's meeting, acting Education Commissioner Donna Frett-Gregory explained that the department has currently identified $236,149 to help pay off a portion of the debt. For the payment to be made in full, the Legislature first has to approve a services-rendered contract between Education and Silcott Construction, she added.
Also speaking during Tuesday's meeting were representatives from Vanterpool Enterprises (owed close to $6 million for repairs made to various facilities damaged by Hurricane Marilyn) and V.I. Cleaning Services.
Later in the meeting, senators also approved a $1,000 appropriation transfer for the Bureau of Information Technology to allow for the creation of a petty-cash fund.
Present during Tuesday's meeting were Davis, Figueroa-Serville, Nelson, Russell and Weber, along with Hill, and non-committee members Sens. Usie R. Richards and Alvin L. Williams.
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