‘Scatter and reduce locations’: Guelph plans to license payday loan companies
City staff are proposing a number of changes to how payday loan businesses operate in Guelph – a move they say will help protect vulnerable residents in the city.
According to a report in the run-up to the September 7 Committee of the Whole meeting, city staff are proposing that beginning in 2022, payday loan businesses in Guelph should apply for a license from the city, with that license to be renewed annually .
By allowing these businesses, city staff say it will help ensure that the eight provincially-licensed establishments of Guelph follow the rules, as well as “scatter and reduce locations” and ensure that they do not not congregate in one area or another.
Pending council approval, changes would also be made to Guelph’s business licensing by-law that would set 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 yards from a school or public park.
City staff note that these restrictions are consistent with what has been done in Hamilton and Kitchener, and are similar to the rules in place for cannabis retail stores in Guelph.
With respect to existing payday loan businesses, city staff note that they “will be recognized in the new bylaw schedule and will be allowed to remain in operation until ownership changes or location is changed. 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 from banks. In some cases, low-income residents can find themselves in financial difficulty by taking out payday loans that often create a vicious cycle, sometimes ending in bankruptcy,” the report adds.
The report comes after the advice staff managed in 2019 to take a look at payday loan companies in Guelph and suggest potential changes to the city’s 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 examined, five had caps on the number of payday loan establishments that would be allowed and 11 had restrictions on where they could operate.
Changes to the city’s business licensing program aren’t the only thing that can be done to address the challenges associated with payday loans, staff say.
In their report, staff say that with more research, “alternative loan programs can be created with community partners and/or financial institutions.”
“The city would explore with community partners and poverty advocates 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 nation’s capital, the non-profit organization Ottawa Community Loan Fund offers small loans to those looking to take professional development programs to make them more employable or to start a small business.
In the GTA, the ACCESS Community Capital Funds offers small loans to those looking to start a business but have bad credit or lack the assets typically needed as collateral for a loan.
City staff will first present their recommendations to council’s Sept. 7 Committee of the Whole, which is scheduled to begin at 2 p.m.
Persons wishing to register as delegates to this meeting are asked to contact the Clerk’s office no later than 10:00 am on September 3rd. The Clerk’s Office can be reached at 519-837-5603, via TTY at 519-826-9771, by email at firstname.lastname@example.org or online at guelph.ca/delegate.
Written comments may also be submitted to the City Clerk’s Office and will be accepted until 10 a.m. on September 3.