The House Finance Committee on May 9 held Senate Bill 39, a measure sponsored by Sen. Robert Dunbar that would cap annual percentage rates for payday and other small-dollar loans at 36% and add an anti-evasion clause to bring some out-of-state online lenders under Alaska law.

The bill’s sponsor told the committee the change would align state law with the federal cap already protecting active-duty service members and argued the measure would reduce cycles of repeat borrowing that drive severe debt. "This bill...would bring payday lenders in line with Alaska's existing small loans act," Dunbar said. He also told the committee that Alaska borrowers who use payday products take out an average 5.5 loans a year and that some lenders charge triple- and quadruple-digit APRs.

Why it matters: testimony from consumer groups and the sponsor emphasized that payday loans often lead to repeat borrowing and financial instability. Claire Lubcke of Alaska Public Interest Research Group said existing statutory disclosures and payment-plan requirements have not prevented many borrowers from taking successive loans: "The deferred deposit advance licensees statute does require a disclosure before they make a loan to a customer," she said, and added that survey data show repeat borrowing is common.

Key facts and evidence presented
- Sponsor's intent: Sen. Dunbar described the bill as "a bill to cap payday loan annual percentage rates at 36% aligning with the federal cap that already protects active duty service members and their families." He said the bill passed the legislature last year and was refiled with minor technical changes.
- Consumer-impact findings: Dunbar and witnesses cited research indicating the payday model depends on repeat borrowing; Dunbar said the Alaska Public Interest Research Group reported average payday APRs in Alaska near 421% and average borrower frequency of 5.5 loans per year.
- Garnishment of Permanent Fund dividends: Dunbar said payday lenders garnished about $3,700,000 from Alaskans' permanent fund dividends from 2017 to 2022.
- Fiscal note: Brodie Anderson, staff to Rep. Neil Foster, summarized a fiscal note from the Department of Commerce, Community and Economic Development showing no operating-cost impact in FY26 and an estimated revenue reduction of $19,500 per year to reflect reduced license receipts. "This fiscal note reflects a 0 operating cost in the FY 26 appropriation. But it does reflect a change of revenue of a reduction of $19,500 of lost revenue," Anderson said.
- Current payday-law mechanics: Division of Banking and Securities staff confirmed current law treats the product as a deferred-deposit advance capped at $500 with a typical 14-day term that may be extended; Chief of Examinations Tracy Reno said, "that is correct that it's 14 days. They may be extended, and then rolled...but it is $500 max for 14 days and then there's possibility of extension." Committee testimony clarified the statute permits an origination fee (commonly $5) and a flat fee (commonly 15%) rather than an interest-rate line item, and that borrowers may take out new loans after rolling an originating loan twice.
- Anti-evasion language: Andrew Kushner of the Center for Responsible Lending described the proposed anti-evasion clause as a response to "rent-a-bank" arrangements. He summarized the provision: "for certain online lenders that partner with a state bank...the online lender...can become subject to Alaska law," a mechanism other states have used to prevent out-of-state lenders from evading state interest-rate limits.

Debate and concerns
- Access to small-dollar credit: opponents and several committee members raised concerns that a 36% cap would make small-dollar loans uneconomic for some lenders and reduce access for underbanked consumers. Senator Dunbar and consumer witnesses countered that other states have not seen catastrophic loss of small-dollar lending and that mainstream banks, credit unions and new fintech products offer alternatives.
- Pawn loans and collateralized lending: committee members asked why pawn loans are treated differently. Dunbar and witnesses explained pawn loans are collateralized and have long been treated as distinct under state law; proponents said pawn-shop business tends to remain local and is not the same repeat-debt model as payday products.
- Unclear practical access: lawmakers pressed regulators and witnesses about how low-income Alaskans would obtain emergency funds if payday products became less available. Dunbar and witnesses pointed to small-dollar products from some credit unions and fintech lenders that operate within the 36% cap, and to state homeless- and rental-assistance programs.

Committee action and next steps
The committee did not take a final vote on SB 39 on May 9. Cochair Foster said the bill would be held for further consideration and likely taken up again at the committee’s next meeting. The committee requested further written information and clarifications from regulators and interested parties.

Ending: The committee scheduled a continuation of its work for Monday, May 12, and committee leaders said they would circulate follow-up materials and any updated fiscal or technical analyses before the next hearing.