II 

109TH CONGRESS 

1ST SESSION S. 1347 

To authorize demonstration project grants to entities to provide low-cost, 

small loans. 

IN THE SENATE OF THE UNITED STATES 

JUNE 30, 2005 

Mr. AKAKA introduced the following bill; which was read twice and referred 

to the Committee on Banking, Housing, and Urban Affairs 

A BILL

To authorize demonstration project grants to entities to 

provide low-cost, small loans.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. GRANT PROGRAM FOR LOW-COST ALTER4 NATIVES TO PAYDAY LOANS. 

5 (a) SHORT TITLE.—This section may be cited as the 

6 ‘‘Low-Cost Alternatives to Payday Loans Act’’. 

7 (b) DEFINITIONS.—In this Act: 

8 (1) COMMUNITY DEVELOPMENT FINANCIAL IN9 STITUTION.—The term ‘‘community development fi10 nancial institution’’ means any organization that has 
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1 been certified as a community development financial 

2 institution pursuant to section 1805.201 of title 12, 

3 Code of Federal Regulations. 

4 (2) FEDERALLY INSURED DEPOSITORY INSTI5 TUTION.—The term ‘‘federally insured depository in6 stitution’’ means any insured depository institution 

7 (as defined in section 3 of the Federal Deposit In8 surance Act (12 U.S.C. 1813)) or any insured credit 

9 union (as defined in section 101 of the Federal 

10 Credit Union Act (12 U.S.C. 1752)). 

11 (3) PAYDAY LOAN.—The term ‘‘payday loan’’ 

12 means any transaction in which a small cash ad13 vance is made to a consumer in exchange for— 

14 (A) the personal check or share draft of 

15 the consumer, in the amount of the advance 

16 plus a fee, where presentment or negotiation of 

17 such check or share draft is deferred by agree18 ment of the parties until a designated future 

19 date; or 

20 (B) the authorization of the consumer to 

21 debit the transaction account or share draft ac22 count of the consumer, in the amount of the ad23 vance plus a fee, where such account will be 

24 debited on or after a designated future date. 
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1 (c) ESTABLISHMENT OF PROGRAM.—The Secretary 

2 of the Treasury (referred to in this Act as the ‘‘Sec3 retary’’) is authorized to award demonstration project 

4 grants (including multi-year grants) to eligible entities to 

5 provide low-cost, small loans to consumers that will pro6 vide alternatives to more costly, predatory payday loans. 

7 (d) ELIGIBLE ENTITIES.—An entity is eligible to re8 ceive a grant under this Act if such an entity is— 

9 (1) an organization described in section 

10 501(c)(3) of the Internal Revenue Code of 1986 and 

11 exempt from tax under section 501(a) of such Code; 

12 (2) a federally insured depository institution; 

13 (3) a community development financial institu14 tion; or 

15 (4) a partnership comprised of 1 or more of the 

16 entities described in paragraphs (1) through (3). 

17 (e) APPLICATION.—An eligible entity desiring a grant 

18 under this Act shall submit an application to the Secretary 

19 in such form and containing such information as the Sec20 retary may require. 

21 (f) TERMS AND CONDITIONS.— 

22 (1) PERCENTAGE RATE.—For purposes of this 

23 Act, an eligible entity that is a federally insured de24 pository institution shall be subject to the annual 

25 percentage rate promulgated by the National Credit 
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1 Union Administration’s Loan Interest Rates under 

2 part 701 of title 12, Code of Federal Regulations in 

3 connection with a loan provided to a consumer pur4 suant to this Act. 

5 (2) FINANCIAL LITERACY AND EDUCATION OP6 PORTUNITIES.—Each eligible entity awarded a grant 

7 under this Act shall offer financial literacy and edu8 cation opportunities, such as relevant counseling 

9 services or educational courses, to each consumer 

10 provided with a loan pursuant to this Act. 

11 (g) LIMITATION ON ADMINISTRATIVE COSTS.—Each 

12 eligible entity awarded a grant under this Act may use 

13 not more than 6 percent of the total amount of such grant 

14 in any fiscal year for the administrative costs of carrying 

15 out the programs funded by such grant in such fiscal year. 

16 (h) EVALUATION AND REPORT.—For each fiscal year 

17 in which a grant is awarded under this Act, the Secretary 

18 shall submit a report to Congress containing a description 

19 of the activities funded, amounts distributed, and measur20 able results, as appropriate and available. 

21 (i) REGULATIONS.—The Secretary is authorized to 

22 promulgate regulations to implement and administer the 

23 grant program under this Act. 

24 (j) AUTHORIZATION OF APPROPRIATIONS.—There is 

25 authorized to be appropriated to the Secretary, for the 
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1 grant program described in this Act, such sums as may 

2 be necessary, which shall remain available until expended.

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