CHAPTER 71

An Act to amend and reenact §§ 6-279, 6-285, 6-286, 6-290, 6-801, 6-302,
6-809, 6-810, 6-816, 6-817, 6-820, 6-828, 6-888 of the Code of Virginia,
all being part of the Small Loan Act, and to amend the Code of
Virginia by adding thereto § 6-816.1, in order to increase the maxt-
mum amount of loan from $800 to $600, to provide a rate of charge
on such increase, and to provide certain additional requirements

relating to the issuance of licenses and conducting business there-

u
[H 199]
Approved February 20, 1956

Be it enacted by the General Assembly of Virginia :

1. That §§ 6-279, 6-285, 6-286, 6-290. 6-301, 6-302, 6-309, 6-310, 6-316,
6-317, 6-320, 6-323, 6-338 be amended and reenacted and that the Code of
Virginia be amended by adding thereto § 6-316.1 as follows:

§ 6-279. No person shall engage in the business of lending in amounts
of stz hundred dollars or less, and charge, contract for, or receive, directly
or indirectly, on or in connection with any loan, any interest, charges,
compensation, consideration or expense which in the aggregate are greater
then the rate otherwise permitted by law except as provided in and au-
thorized by this chapter and without first having obtained a license from
the Commission.

§ 6-285. Upon the filing of the application and the payment of the
fees, the Commission shall make an investigation of the facts concerning
the application and the requirements provided for in § 6-286. At least
twenty days before granting such application, the Commission shall mail
a notice of the receipt of the application to each licensee having a place
of business in the community where the applicant proposes to do business.
The Commission may make such investigations relative to the application
and the requirements as it deems fit, and it shall grant or deny each
application for a license within sixty days from the date it is filed together
with all required information and fees unless the period be extended by
order of the Commission reciting the reasons for the extension.

§ 6-286. Ifthe Commission finds (1) that the financial responsibility,
experience, character, and general fitness of the applicant or of the mem-
bers if the applicant be a co-partnership or association, or of the officers
and directors if the applicant be a corporation, are such as are calculated
to command the confidence of the public and to warrant belief that the
business will be operated lawfully, honestly, fairly, and efficiently within
the purpose of this chapter (2) that allowing the applicant to engage in
business will promote the convenience and advantage of the community in
which the licensed office is to be located, (8) that the applicant has avail-
able, for the operation of the business at the specified location, liquid
assets of at least forty thousand dollars if the specified location is in a
* city with a population of more than fifteen thousand, or of at least twenty
thousand dollars if the location is not in a * city with a population of more
than fifteen thousand, * and (4) that all of the prerequisites to obtaining
the license prescribed by § 6-284 have been complied with, (the foregoing
facts being conditions precedent to the issuance of a license under this
chapter), it shall issue and deliver to the applicant a license to make loans
in accordance with the provisions of this chapter at the location specified
72 ACTS OF ASSEMBLY [vA., 1956

in the application, provided, however, if any licensee shall sell his out-
standing loan contracts and surrender his license, the Commission shall
issue a license to the purchaser of said contracts to make loans under this
chapter in the same community without reference to whether the con-
venience and advantage of said community will be promoted thereby, tf
ie purchaser shall qualify in all other respects for the issuance of said
acense.

§ 6-290. The Commission, upon ten days’ written notice to the
licensee stating the contemplated action and in general the grounds there-
for, and upon reasonable opportunity to be heard, may revoke any license
issued hereunder if it finds that:

(1) The licensee has failed to pay the annual license fee or to comply
with any order of the Commission * lawfully made pursuant to and within
the authority of this chapter; or

(2) The licensee, either knowingly or without the exercise of due care
to prevent the same, has violated any provision of this chapter or any
regulation lawfully made by the Commission under § 6-331; or

(3) Any fact or condition exists which clearly would have warranted
the Commission in refusing originally to issue the license, except that no
license shall be revoked solely upon a finding by the Commission that the
business of the licensee is not promoting the convenience and advantage of
the community in which the licensed office is located.

§ 6-301. The Commission shall investigate from time to time the
economic conditions and other factors relating to and affecting the business
of making loans under this chapter, and shall ascertain all pertinent facts
necessary to determine what maximum rates of charge should be per-
mitted. Upon the basis of such ascertained facts, and subject to the
restrictions, provisions and limitations imposed by this chapter, the Com-
mission shal] determine and fix by regulation or order the maximum rates
of charge in connection with such loans which will induce efficiently man-
aged commercial capital to be invested in such business in sufficient
amounts to make available adequate credit facilities to individuals seeking
such loans, and which will afford those engaged in such business a fair
and reasonable return upon the assets; provided, however, that the Com-
mission shall not fix any such rates of charge in excess of two and one-half
per centum a month on that part of the unpaid principal balance * of any
loan not in excess of three hundred dollars, and one and one-half per
centum a month on any remainder of such unpaid principal balance. Sub-
ject to such limitation as to maximum rates, the Commission may from
time to time, upon the basis of changed conditions or facts, redetermine
and refix any such maximum rates of charge, but, before determining or
redetermining any such maximum rates, the Commission shall give reason-
able notice of its intention to consider doing so to all licensees and a rea-
sonable opportunity to be heard and introduce evidence with respect
thereto and such notice shall also be published once each week for two
consecutive weeks in some newspaper published in or having a general
circulation in the county, city, or town in which any small loan licensee has
an office. Any such changed maximum rates of charge shall not affect pre-
existing loan contracts lawfully entered into between any licensee and any
borrower.

§ 6-302. Until such time as different rates are fixed by the Com-
mission in accordance with the preceding section, every licensee may con-
tract for and receive on any loan of money, not exceeding six hundred
dollars in amount, charges at rates not exceeding two and one-half per
centum a month on that part of the unpaid principal balance of any loan
not in excess of three hundred dollars, and one and one-half per centum a
month on any remainder of such unpaid principal.
cH. 71] ACTS OF ASSEMBLY 73

§ 6-309. Every licensee shall maintain at all times the minimum
assets prescribed by this chapter for each license, either in liquid form
available for the operation of or actually used (whether pledged or not)
in the conduct of the business at the location specified in each license.

§ 6-310. No licensee or other person subject to this chapter shall ad-
vertise, display, distribute or broadcast, or cause or permit to be advertised,
displayed, distributed or broadcast, in any manner whatsoever, any false,
misleading or deceptive statement or representation with regard to the
rates, terms or conditions for loans in the amount or of the value of sx
hundred dollars or less. The Commission may require that charges or rates
of charge, if stated by a licensee, be stated fully and clearly in such manner
as it deems necessary to prevent misunderstanding by prospective bor-
rowers, and it may permit or require licensees to refer in their advertising
to the fact that their business is under State supervision, subject to con-
ditions imposed by it to prevent false, misleading, or deceptive impressions
as to the scope or degree of protection provided by this chapter.

§ 6-316. No licensee shall * permit any person, as borrower, or as
endorser, guarantor or surety for any borrower, or otherwise, or any
husband and wife, jointly or severally, to become obligated, directly or
contingently, or both, (a) to the licensee at any time in a sum of more than
siz hundred dollars in principal, nor (b) under more than one contract of
loan at the same time for the purpose of obtaining a higher rate of charge
than would otherwise be permitted by this chapter; provided, however, if
a licensee purchases all, or substantially all, the loan contracts of another
licensee and has at the time of the purchase loan contracts with one or
more of the borrowers whose loans are purchased, the purchaser shall be
entitled to collect the principal and charges according to the terms of each
loan contract, but the purchaser shall not refinance or make a new loan
ak any such borrower except in accordance with the provisions of this

pter.

If two or more licensees are under the same ownership, or under com-
mon control, then such of their offices as are located in the same political
subdivision of the State, or within five miles of each other, shall be treated
as one licensee for the purpose of this section.

8 6-316.1. No licensee shall combine or conspire with another licensee
to cause the same person, or a husband and wife, to borrow less than six
hundred dollars from each of them for the purpose of requiring the pay-
ment of a higher rate of charge than would be permitted if one of said

ees had loaned all, or as much as six hundred dollars of, the amounts
borrowed from both licensees.

§ 6-317. The payment of siz hundred dollars or less in money, credit,
goods or things in action, as consideration for any sale or assignment of,
or order for, the payment of wages, salary, commissions or other com-
pensation for services, whether earned or to be earned, shall for the pur-
poses of this chapter be deemed a loan of money secured by the sale,
assignment, or order, and the amount by which the compensation so sold,
assigned or ordered paid exceeds the amount of consideration actually
paid shall for the purpose of this chapter be deemed interest or charges
upon the loan from the date of the payment to the date the compensation
is payable, which amount shall not, in any case, be more than is sufficient
to yield, to the licensee making the loan, interest on his investment at the
rate of ten per centum per annum. Such transactions shall in all other
respects be governed by and subject to the provisions of this chapter.

§ 6-320. No loan made outside this State in the amount of siz hun-
dred dollars or Jess for which greater rates of interest, consideration or
charges, than is permitted by the law applicable to such loan in the state in
which the loan was made, has been charged, contracted for, or received
74 ACTS OF ASSEMBLY [VA., 1956

shall be collected in this State and every person in any wise participating
in an effort to enforce the collection of such loan in this State shall be
subject to the provisions of this chapter. .

§ 6-323. For the purpose of discovering violations of this chapter
or securing information lawfully required under it, the Commission or its
duly authorized representatives may at any time investigate the loans,
books and records of any person who is engaged, or appears to the Com-
mission to be engaged, in the business of making small loans as defined and
described in, and required to be licensed and supervised under this chapter,
particularly in § 6-279, or who advertises for, solicits, or holds himself
out as willing to make, loans in amounts of siz hundred dollars or less, or
who the Commission has reason to believe is violating any provision of
this chapter, whether such person shall act or claim to act under or without
the authority of this chapter, or as principal, agent, broker or otherwise.
In furtherance of the investigation the Commission through its duly au-
thorized representatives shall have and be given free access to the offices,
places of business, books, papers, accounts, records, files, safes, and vaults
of all such persons, and shall have authority to require attendance of wit-
nesses and to examine under oath any person whose testimony may he re-
quired relative to any such loans or business or to the subject matter of
the investigation, examination or hearing. .

§ 6-338. Any lender violating any provision of this chapter, either
knowingly or without the exercise of due care to prevent the violation,
shall be subject to a fine, to be imposed by the Commission, of not less than
ten dollars nor more than five hundred dollars; and if any lender, * in the
making or collection of any contract of loan violates, either knowingly or
without the exercise of due care to prevent the violation, any provision of
§§ 6-312 through 6-315, * he may recover or retain only the principal
amount of the loan and any interest paid shall be recoverable.

2. An emergency exists and this act is in force from its passage.