Brian Scott chose to start businesses in Ohio 12 years ago because the Buckeye State had something his state didn't -- laws to regulate his industry.
Now, more regulations are what he fears most.
Scott, who owns eight Express Cash Advance stores, said a bill awaiting the governor's signature will put him and about 6,000 other Ohioans out of work.
But advocates believe such a loss may be necessary to put an end to a practice they say is already crippling the economy by putting thousands in a spiral of debt.
House Bill 545, which recently passed through the state senate, would institute a 28 percent cap on annual percentage rates for payday loans -- known for APRs exceeding 300 percent.
Payday lenders say the APR they are required to list is not only misleading -- it's a mathematical impossibility.
"Our typical customer only borrows four to five times a year -- nowhere near the 26 times a year it would take to get anywhere near the 391 percent APR," Scott said, adding that the $15 lenders charge for every $100 borrowed is really a service fee, not a true APR.
Scott said there are no hidden costs or late fees in his industry -- only a charge for insufficient funds if the company cashes a customer's check after their payday and the check bounces. That fee can range from $20 to $30 -- less than most bank overdraft fees or credit card late fees.
Scott, who has already laid off half his employees and stopped issuing loans in three of his stores, said the legislation will also be detrimental to his customers, who rely on loans to avoid accumulating penalty fees elsewhere.
Mike Steele, who owns 24 Fast Cash stores in Ohio, said he already eliminated 70 of his 110 employees and is preparing to cut more.
"The reality is we have clients crying, screaming at us ... they don't know what they're going to do next," Steele said. "We don't have any answers for them at this point."
Advance America spokesman Jamie Fulmer, who witnessed testimony before legislative committees, said lenders seemed willing to compromise. They discussed alternatives, such as a statewide database to monitor the number of outstanding loans a customer had at other payday lending locations and better education on financial literacy. But Fulmer said legislators wouldn't budge unless the lenders agreed to the 28 percent APR cap, which he calls unrealistic.
"What folks could not understand is that we operated on a 7.7 percent net profit margin in 2007 -- a very slim profit margin," Fulmer said. "If you take our fee to what they were proposing, we still have (the) same rent, utility costs ... let alone the credit risk of letting people borrow money."
Citing a recent Zogby International survey, which found 84 percent of Ohio voters believe individuals should be free to make their own decisions about credit products, Fulmer said he is disappointed legislators took action that would negatively affect the economy.
"If you take away this product, you've done absolutely nothing to address their need for this," Fulmer said. "You've only given them more expensive, possibly credit-damaging options."
But Sen. Mark Wagoner said payday lending practices have already destroyed credit for too many Ohioans.
"What was clearly occurring was people were taking out other payday loans to cover their original loans," he said, "and each time, they're racking up more and more fees, with no real foreseeable way for folks to pay this money back."
Suzanne Gravette Acker, spokeswoman for the Ohio Coalition for Responsible Lending, said payday lending products are designed to trap people least likely to afford them.
While most lenders said their average customers take out four to seven loans each year, Gravette Acker said the coalition found the average borrower actually uses the product between 11 and 12 times annually because they seek loans from more than one store.
"The product is toxic -- it hurts people," she said. "We have to look at the 300,000 trapped borrowers in Ohio."
The coalition defines a 'trapped borrower' as someone who takes out more than five loans in one year, she said, adding that the majority of fees tend to accumulate after the fifth loan.
Payday lending products were initially exempted from small loan laws because they were intended for short-term emergencies -- not long-term borrowing, she said.
Erie County Serving our Seniors executive director Sue Daugherty, who testified on the legislation before house and senate committees, said payday lending especially hurts those on fixed incomes.
"One argument I heard was the average payday lending customer income is $35,000 a year -- but how many people are living on that salary?" Daugherty asked. "Our agency found that people making $800 to $1,100 a month are the ones who have been harmed by payday lending."
Daugherty said if payday lenders really cared about their clients, they would conduct a brief screening process to assess their debt-to-income ratio and determine whether that client could actually afford a loan.
"That would be fair and responsible lending," she said. "What they're doing (now) takes advantage of a person's situation ... they set them up so they have to use payday lending stores again and again."
Gov. Strickland's press secretary said he expects the bill to be signed within the next few days.
"The governor has long believed that payday lending reforms are necessary, and he's looking forward to signing this legislation early next week," Keith Dailey said.
He said there is no emergency provision in the bill to make it effective immediately, so it would likely take effect in late August.