Gov. DeSantis signs law upping rate caps on loans while cracking down on online loan sharks

Sen. Colleen Burton.

Gov. Ron DeSantis signed on Friday an increase in interest rate caps on loans that accompanied a crackdown on online loan sharks.

The legislation (HB 1347) prohibits operation of branches of businesses making consumer finance loans before obtaining proper licensing. It also ups the minimum amount of time before delinquency charges can be imposed from 10 to 12 days.

But the legislation also revises maximum interest rates on consumer finance loans, raising the lending cap to as high as 36%.

This bill was shepherded in the Senate by Sen. Colleen Burton, a Lakeland Republican, and in the House by Rep. Robbie Brackett, a Vero Beach Republican.

On the Senate floor, Burton said the legislation should encourage more legitimate lenders to operate in the state while also providing appropriate consumer protections. The highest interest rates will only be allowed on loans where lenders are taking on significant risk.

“These are high risk loans, and lenders are not coming to Florida,” Burton said.

The new law allows rates as high as 36% on loans up to $10,000. Right now, lenders can only offer a loan of up to $5,000 with a 26.4% rate, and a loan between $5,000 and $10,000 at a rate of 22.2%.

For loans of up to $25,000, rate jumps from a previous rate cap of 19.2% to now31.2%.

The bill drew some criticism for providing a significant cushion to lenders while potentially leaving consumers on the hook for massive interest rates.

“How do we know that 36% is the magic bullet to be able to capture and keep people and be able to lend more affordably?” said Sen. Jason Pizzo, a Miami Beach Shores Democrat. “I can’t believe I’m using ‘affordably’ and 36% in the same sentence.”

Sen. Lori Berman, a Boynton Beach Democrat, expressed a concern about online lenders already offering loans with high payments and putting consumers on the hook for massive costs.

Burton said the legislation hopes to attract more legitimate lenders into Florida so those online lenders aren’t the only option available to many consumers. The branch language seeks to dissuade lenders trying to work around state regulations.

The bill ultimately passed in the Senate by a narrow 21-18 margin, but in the House on a wider 104-10 vote.

The new law goes into effect on July 1.

The Governor signed the legislation in a final batch of bills on his desk that were approved during the 2024 Legislative Session.