VIRGINIA SB1252

JANUARY 31, 2025

In the 2025 legislative session, Virginia introduced Senate Bill 1252 (SB 1252), aiming to amend existing statutes governing financial institutions, loans, and interest rates. This bill has sparked considerable debate due to its potential implications for borrowers and lenders alike.


OVERVIEW OF SB 1252

SB 1252 proposes amendments to §§ 6.2-300 and 6.2-303 of the Code of Virginia. The key provisions include:



PROS OF SB 1252:

1. Consumer Protection: By capping interest rates at 12%, the bill aims to shield consumers from predatory lending practices that can lead to insurmountable debt.

2. Clarity in Financial Transactions: The bill's explicit definitions and prohibitions against evasive lending practices promote transparency, ensuring that all financial transactions are straightforward and fair.

3. Regulation of Inheritance Advances: Classifying inheritance advances as loans ensures that individuals are protected from potentially exorbitant fees and interest rates in these agreements.


CONS OF SB 1252:

1. Restricted Access to Credit: The stringent 12% interest rate cap may discourage lenders from offering loans to higher-risk borrowers, potentially limiting access to credit for individuals and small businesses that need it most.

2. Impact on Alternative Financing: The bill's broad definitions could encompass alternative financing arrangements, such as merchant cash advances, subjecting them to the interest rate cap and potentially reducing funding options for entrepreneurs.

3. Unintended Consequences for Financial Innovation: The prohibition of certain financial practices deemed as evasive could inadvertently stifle innovation in financial products and services that might benefit consumers.



CALLS TO ACTION FOR VOTERS:
As SB 1252 progresses through the legislative process, it's crucial for Virginia voters to engage actively:



By taking these steps, voters can play a pivotal role in shaping legislation that balances consumer protection with access to financial resources.

THE GLOSS

  • Senate Bill 1252 (SB 1252) in Virginia aims to protect consumers by limiting loan interest rates to 12%, but it might make it harder for some people to get loans. 

  • This could especially affect Black communities, who often face higher interest rates and fewer loan options due to systemic racism. 

  • While the bill seeks to prevent unfair lending, it might unintentionally limit access to credit for those who need it most.

  • Learn about SB 1252 and talk to your local representatives to share your thoughts on how it could impact your community.