This bill amends existing law (RCW 31.45.073) to impose detailed limits and procedures for "small loans" made by licensed lenders, including check cashers and check sellers. It requires a small loan endorsement for each location where small loans are made, allows a licensee to hold multiple endorsements, and requires an endorsement for anyone who cashes or advances funds on a postdated check in excess of the purchase amount. The bill sets due date rules tied to a borrower’s pay dates, limits loan terms to 45 days from origination unless mutually extended with no additional fee or interest, and allows loan proceeds to be paid in cash, check, or electronic equivalent. The bill creates substantive regulatory changes: a maximum principal per borrower at any time equal to $1,200 adjusted for inflation or 30% of the borrower’s gross monthly income, whichever is lower; a biennial inflation adjustment to begin January 1, 2027, with the Department of Financial Institutions required to calculate and publish the adjusted maximum in the Washington State Register; a prohibition on new small loans to a borrower in default or on an installment plan until the debt is paid or two years have passed; a frequency cap of eight small loans per borrower in any 12-month period; fee caps of up to 15% on the first $500 of principal and up to 10% on amounts above $500 (with aggregation rules across loans); limitations on collateral to a single postdated check per loan with the borrower able to redeem the check for cash or equivalent; and rulemaking authority for the director to specify fees not subject to the caps. The change is a regulatory and procedural reform of existing small-loan law rather than a new criminal offense or penalty change; the text grants administrative duties (biennial CPI calculation and publication) and rulemaking authority but does not in the provided excerpt specify enforcement mechanisms or penalties for violations. The extracted text does not include chapter-wide definitions (for example of "licensee" or "director") or other related statutory provisions, so those definitions and enforcement details may appear elsewhere and are not addressable from the provided material.

If enacted, payday-style lenders and check-cashing businesses that make short small loans will face tighter limits on how much they can lend, how often a person can borrow, and how much they can charge. Lenders will need a separate small loan endorsement for each storefront where they make loans, must set due dates based on a borrower’s next pay dates, limit loan terms to 45 days unless both parties agree to extend with no extra fees, cap fees at 15% on the first $500 and 10% above that, and may only take a single postdated check as collateral. Borrowers will likely see fewer repeat short-term loans (no more than eight in 12 months), lower maximum loan sizes tied to a $1,200 cap adjusted for Seattle CPI or 30% of monthly income (whichever is lower), and restrictions on getting new loans while in default or on active installment plans until paid or two years have passed. The Department of Financial Institutions will have a new recurring duty to calculate and publish inflation adjustments every two years starting January 1, 2027, and the agency director can adopt rules about which fees are excluded from the caps. Practically, lenders may face reduced fee revenue, added compliance steps (separate endorsements per location and new refusal obligations), and potential operational risk around measuring aggregated loans to a borrower across multiple licensees; the text does not clearly explain how cross-license aggregation or enforcement will be implemented.