Connecticut Small Loan Statute Changes Impact Bank Partnerships

Effective July 1, 2016, amendments to Connecticut’s small loan statutes impact entities that partner with banks to originate loans in the Nutmeg state. Under the amendments, nonbank lead generators, most servicers and most nonbank purchasers of certain “small loans” of $15,000 or less with an annual percentage rate that exceeds 12% are subject to licensure. The amendments define “generating leads” as(A) engaging in the business of selling leads for small loans; (B) generating or augmenting leads for small loans for other persons for or with the expectation of compensation or gain; or (C) referring consumers to other persons for a small loan for or with the expectation of compensation or gain for such referral.

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