Fast growth of payday stores in Utah cools

As more Utah cities limit the numbers of "payday loan" stores — which offer two-week loans, or until the next payday, for about 500 percent annual interest — the once-explosive growth in that industry has cooled here.

The number of such brick-and-mortar stores grew by 5 percent in Utah this year, from 380 to 399, according to Deseret News analysis of registration data provided by the Utah Department of Financial Institutions.

Additionally, another 65 payday lenders based outside the state are registered to operate in Utah via the Internet or mail. So the total number of all payday lenders registered to operate in the state grew from 447 last year to 464 this year.

That growth rate was about the same as between 2006 and 2007. But it is much slower than in recent decades. The first payday lender appeared in Utah in 1984. Their numbers grew to 17 by 1994. And then it exploded to 427 stores and Internet loan providers by 2005.

The industry here has more stores than the number of 7-Elevens, McDonald's, Burger Kings and Wendy's in Utah — combined.

In 2005, West Valley City became the first city to limit how many payday lenders it would allow within its borders.

Since then, such cities as American Fork, Draper, Midvale, Murray, Orem, Sandy, South Salt Lake, South Jordan, Taylorsville, West Jordan and unincorporated Salt Lake County have also limited their numbers. Salt Lake City and Provo are also considering limits. Most limit them to one store per 10,000 or so residents — which usually would allow no more stores to be built.

The industry says the slowing growth is due mostly to maturing and saturation by the industry, and has little to do with restrictions by cities — although critics of the industry disagree.

Wendy Gibson, spokeswoman for the Utah Consumer Lending Association for payday lenders, says its members "believe the moderate growth in the number of lenders across the state of Utah is due to the maturing of the industry," and is similar to growth by banks or credit unions.

"The zoning restrictions enacted by some municipalities has had little to do with the maturation," she said. Gibson added that such restrictions "have done little more than hamper consumers' ability to find the most convenient lender," and that it "can limit competition."

However, data show some big growth came in areas where restrictions were not yet in place but were under consideration.

For example, the number of payday loan stores grew from 30 to 38 in Salt Lake City, which is considering a ban but has not enacted it. The numbers in unincorporated Salt Lake County grew to 16 now from nine last year — before the county enacted a moratorium and then later permanent restrictions on the numbers it would allow.