SUNNYVALE (KCBS) – Sunnyvale has closed the window on payday lenders, enacting an ordinance Wednesday that caps the number of such businesses allowed in the city.
The new law allows for six payday establishments, with a grandfather clause that allows the eight already in Sunnyvale to continue operating.
“We’ll put a cap on it, but it’s not taking care of the problem,” said Mayor Tony Spitaleri.
Spitaleri sees the ordinance as a first step towards tackling a larger problem that will persist as long as banks put up barriers for low-income customers trying to open checking and savings accounts.
“We have low income families that are in need of cash. The financial institutions are not willing, as of today in our area, to step up and help,” he said, adding that payday lenders business model depends on that void in the marketplace.
“No one puts a gun to these folks that walk in and borrow this money. They do it out of desperation, out of need. And these companies meet the need, whether we like it or not,” he said.
Spitaleri said the city council should next consider policies to eliminate that consumer demand.
“There’s nothing we can do about the payday loans. It’s a business,” he said, “and it’s going to continue. So what we really new is re-focus our energy on how do we reduce their clientele.”
Spitaleri said the Sunnyvale law was drafted because of growing complaints about high interest rates typically charged by payday lenders that lead to a cycle of borrowing and repayment that’s often difficult to escape.
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