State stops nursing homes from offering payday loans

JEFFERSON CITY, Mo. -- Dozens of Missouri nursing homes have been running payday loan operations, but the state is putting a stop to it.

The state Department of Health and Senior Services said Tuesday that 74 of the state's 1,171 long-term care facilities have been offering payday loans to their workers. The practice has been allowed since 2001, but the facilities need state permission to run another type of business within a nursing home.

The department began denying renewal requests and any new requests late last month. Nursing homes were notified by letter of the change in policy, department spokeswoman Nanci Gonder said.

Gov. Matt Blunt said payday loan companies usually charge high fees and should not be taking advantage of nursing home employees.

"Payday loans typically charge exorbitant amounts in interest for those who borrow from them," Blunt said. "Employers should not be making money off the wages they pay their hardworking long-term care facility employees."

Jon Dolan, executive director of the Missouri Health Care Association, which represents the nursing home industry, said a small fraction of nursing homes have offered the service and described it as a fringe benefit for workers, not a predatory lending scheme.

"This is a long-standing practice based on small-town employers helping employees," Dolan said Tuesday. "We by no means are running payday loan operations. We are providing a small benefit to employees that otherwise don't have access to credit and don't like the bank charges for bouncing checks."

Still, he said, the industry understands the concern that such a system could be abused and would comply with the change.

Rules governing long-term care facilities allow nursing homes to operate activities directly related to running the homes, and Blunt said payday loan operations don't fall within that category.