After Restricting Payday Lenders, Metro Rushes To Limit New ‘Flex Loan’ Shops

A Metro law that restricts where payday lenders and cash advance stores can operate is being tested in Donelson, where a well-known chain wants to offer a new product known as a “flex loan.” So far, Metro regulators and the local councilman stand opposed, but a fight is brewing.

Two years ago,
Metro set a distance rule that doesn’t allow several types of high-interest loan businesses to cluster together: payday lenders, check cashing stores and title loan shops.

Echoing the council members who passed the law in late 2014, newly elected Councilman Jeff Syracuse said such institutions are “not the greatest use of property when you’re trying to raise the quality of life for the community.”

But the local law didn’t anticipate a new product made possible by a change to state law.

“I certainly welcomed that legislation last year. So to come to find out that we have a new potential type of the same fundamental product to try get around that legislation is concerning,” Syracuse said.

He
filed a bill to close a loophole because a bright orange
Tennessee Quick Cash (also known for its 
“
C
ash Fairy
“ 
commercials) is trying to open at 2535 Lebanon Pike with a new product that isn’t identified in Metro’s law. It’s called a flex loan, or line of credit.

For now, Metro Codes has treated the business like a payday lender and denied its permit because of several similar shops nearby. (The Metro law prohibits the businesses from locating within 1,320 feet of one another.)

The company’s attorney, Peter Curry, says there’s no legal ground to block them. He said Metro’s distance requirement is “probably illegal,” but that isn’t the crux of his argument.

He says the key point is that the proposed business is regulated under a different state statute than payday loans, check cashing and title loans.

“I’m confident that if someone with a law degree takes an objective look at the issue, the answer is so obvious,” Curry said. “All of a sudden, the legal department takes this position that black is white and white is black and he can’t open his business. There’s just something not right about that.”

The company has appealed to the local zoning board for its permit.

And if the council does vote to restrict more types of financial institutions, Curry says such a change would be too late to affect his case.

So while he’s confident the law is on his side, he said there’s damage being done.

“My client, who bought the property in expectation of opening a new store, has a piece of property sitting out there that he can’t use at all,” Curry said. “It may take months. Meanwhile, he’s out of business.”