Michigan’s November 2022 Ballot to Include Fair Lending Proposal Capping Payday Loan Interest Rates | Ballard Spahr LLP


Proponents of the Payday Loan Interest Rate Cap ballot initiative in Michigan met the June 1, 2022 deadline to appear on the November 2022 ballot in the state.  If not picked up by the state legislature this summer, the proposal would ask voters to approve a state statute capping payday loan interest rates, that can currently reach over 370% APR, at no more than 36% APR.

The state’s indirect initiated statute process requires collecting timely signature support equivalent to eight percent of votes cast for governor in the last gubernatorial election, or 340,047 for 2022’s election, in order to be considered.  Michiganders for Fair Lending – the initiative’s sponsor – collected over 570,000 signatures of which it submitted (after a quality control process) 405,265.  The group cited numerous concerns as to why the payday loan interest rate cap was necessary, including evidence that the current rate terms trap vulnerable state citizens in a cycle of debt, make it difficult to secure housing, and disproportionately impact rural communities and communities of color.  They note similar state initiatives have passed with significant bipartisan support, and list partner supporters such as Community Economic Development Association of Michigan (CEDAM), Project GREEN, Lake Trust Credit Union, ACLU, NAACP of Grand Rapids, Habitat for Humanity, United Way of Michigan, Michigan League for Public Policy, Center for Responsible Lending; Center for Civil Justice; and Black Impact Collaborative.

Having met the deadline to submit the necessary signatures, once validated by the Board of State Canvassers, the Michigan Legislature will have 40 days to approve the initiative, as submitted.  If the legislature rejects the proposed initiative or fails to act by the deadline, the proposal will be placed on the November 2022 ballot for voters to decide.  If passed, Michigan would join 18 states plus the District of Columbia that have capped payday loan rates at 36% APR or less.  The cap figure mirrors that of the interest rate cap on lenders serving active-duty service members and dependents established by the Military Lending Act, and has been a recent benchmark for “all-in” rate caps.  As noted by the sponsor, these types of ballot initiatives are generally popular with voters, and it is highly likely the initiative will become law in Michigan.

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