“Scatter and Shrink Locations”: Guelph to Explore Allowing Payday Loan Companies
City staff are proposing a number of changes to how Guelph’s payday loan businesses operate – a move they say will help protect vulnerable residents of the city.
According to a report As the Committee of the Whole meeting on September 7 approaches, city staff are proposing that starting in 2022, Guelph payday loan companies will need to apply for a permit from the city, which must be renewed annually. .
By licensing such businesses, city staff say it will help ensure that the eight provincially licensed establishments in Guelph follow the rules, as well as “disperse and reduce locations” and ensure that ‘they don’t come together in one area or another.
Pending council approval, changes would also be made to the Guelph Business License By-law which would establish minimum distances between these establishments, as well as from public spaces. City staff say there should be a minimum of one kilometer between each business and 150 meters from a school or public park.
City staff note that these restrictions are in line with what has been done in Hamilton and Kitchener and are similar to the rules in place for retail cannabis stores in Guelph.
With regard to existing payday loan businesses, city staff note that they “will be recognized in the new schedule and allowed to remain operational until the owner changes or the location is sold.”
According to their report, city staff say those who use payday loan services, for the most part, “are economically vulnerable or in financial difficulty.”
“Most of the time, they are not eligible for credit in banks. In some cases, low-income residents can find themselves in serious financial difficulty by taking out payday loans which often create a vicious cycle, which sometimes results in bankruptcy, ”the report adds.
The report comes after the board staff supervised in 2019 to take a look at the payday loan companies in Guelph and to suggest potential changes to city bylaws.
As of 2018, Ontario municipalities have the power to dictate where these types of businesses can and cannot operate within their borders, with Hamilton being the first to take such steps in February of the same year.
According to the staff report, of the 30 comparison municipalities they looked at, five had limited the number of payday lending establishments that would be licensed and 11 had restrictions on where they could operate.
Changes to the city’s business licensing program aren’t the only thing staff can do to address the challenges associated with payday loans.
In their report, staff state that with more research, “alternative lending programs can be created with community partners and / or financial institutions.”
“The city would investigate with community partners and advocate against poverty for alternative ways to improve access to low-cost financial products and services,” the report adds.
“Additional supports can be the key to financial stability that completely eliminates the need for quick cash (and all fees).”
In the national capital, the non-profit association Ottawa Community Loan Fund offers small loans to those looking to pursue professional development programs to make them more employable or to start a small business.
In the GTA, the ACCESS Community Capital Fund offers small loans to those looking to start a business but have bad credit or lack assets usually needed as collateral for a loan.
City staff will first present their recommendations to council’s Sept. 7 plenary committee, which is scheduled to begin at 2 p.m.
Those wishing to register as a delegate for this meeting are asked to contact the city clerk’s office no later than 10 a.m. on September 3. The clerk’s office can be reached at 519-837-5603, via TTY at 519-826-9771, by email at [email protected] or online at guelph.ca/delegate.
Written comments can also be submitted to the City Clerk’s office and will be accepted until 10 a.m. on September 3.