The perennial dispute over payday lending interest rates is again bubbling in the Illinois legislature, and both sides of the issue are redrawing the battle lines.

Joan Krupa of Peoria introduced House Bill 6734 to amend the Payday Loan Reform Act of 2005, just as the 95th General Assembly drew to a close earlier this month.

It was the only piece of legislation Krupa introduced during her stay in the House as an appointee, which ended Jan. 14 after less than nine days.

The bill includes provisions that would cap the annual percentage rate for small consumer loans at 36 percent, ban or limit many of the fees lenders currently charge, and require the lender to confirm a borrower's ability to repay a loan.

Outgoing House Financial Institutions Committee Chairman Mike Boland of Moline was the deciding vote to get the Payday Loan Reform Act of 2005 out of committee and to a vote on the House floor.

"The last bill did some good, but didn’t give all the protections we needed,” Boland said in an interview. “I especially like the idea of the 36 percent ceiling; it has been done in other states and done well.”

Currently when annualized the regular charge for a two-week loan can be as high as 400 percent and to those in the industry a cap at 36 percent is unreasonable.

"No one could afford a 90 percent drop,” PLS Financial Services Inc. President Bob Wolfberg said. “It’s an outlaw bill.” PLS is a privately-owned loan and check-cashing company based in Chicago that manages more than 300 stores in nine states.

Boland cited a story of one of his constituents who saw a $200 loan balloon to more than $3,000 in under three years as proof there needs to be more regulation of the payday lenders.

"I think they’ll still be in business, but obviously this would hit them in the pocketbook,” Boland said.

In Wolfberg’s opinion, implementing an APR cap on a short-term loan would be akin to annualizing the cost of any  one-time purchase. He said annualizing the fees for short-term loans would be like regulating the annual cost of a $4 cup of coffee because it would cost $1400 per year, or limiting nightly hotel fees because a $200 per night hotel room annualized over a year would cost more than $70,000.

Wolfberg also said PLS already checks that their borrowers are employed and have a checking account, and that even with a checking account people go to PLS because the $15 to $20 fee is less than a standard bank overdraft fee of $30.

Wolfberg said PLS fees are well within reason, considering their loans aren’t secured.

 “For longer term debt there’s certain types of debt that’s better,” Wolfberg said, “and for shorter term debt there’s certain types of debt that’s better.”

The only thing PLS and Boland agree on is that the newly introduced legislation will not be passed or vetoed quickly.

PLS will be working with the Department of Financial Institutions to ensure the company's interests are heard during the process, Wolfberg said, and Boland is not yet certain if he will keep the Financial Institutions chairmanship for the 96th General Assembly.

"It’s going to be very difficult,” Boland said, “As everything happens in Springfield, it’s going to take some time.”