so prosper will allow borrowers from nevada now after this deal with webbank?
only south dakota seems to be excluded
http://www.prosper.com/legal/states_and_licenses.aspx
My question is, how does this deal help to include other states, but not S. Dakota? What is the issue with S. Dakota?
IIRC, almost all the credit card companies are actually based in S. Dakota, the state legislature passed some sweetheart laws to attract jobs, I am guessing one of the laws still make non-credit card interstate loans illegal
AsI understand the federal laws, South Dakota cannot prevent an out-of-state bank from lending money to its residents under the interest rates allowed by the bank's home state.
However, it may be that South Dakota law requires all lenders to be licensed in order to purchase loans originated in that state. (This restriction would have applied equally to LendingClub, when it was operating as a P2P business.)
Money Lending License
Required for individuals or corporations to engage in the business of lending money, including creating and holding or purchasing and acquiring any installment loan, single pay loan, or open-end loan which may be unsecured or secured by personal property. Requires filing a surety bond application. State and national banks, bank holding companies, other federally insured financial institutions, and the subsidiaries of those institutions are exempt from licensure. In addition, SD chartered trust companies are exempt from licensure. Any individual or corporation holding this license is required to pay the bank franchise tax.
Duration: 1 year
Cost: Application $600
Renewal $600
http://www.sdreadytowork.com/dbisd/startup/step8.asp[This interpretation is from an official SD state website; I didn't search for the actual statutory language.]
I wonder, though, if this rule would apply to lenders living in South Dakota and purchasing loans originating in other states, just as California law governs Prosper's collection activity regardless of the borrower's state.
