Your State Capped Small Loans at 36%. A 195% Lender Found the Off Switch.

If your state capped what a small-dollar lender can charge you, that cap has an off switch. It isn’t in your statehouse.

It’s a bank charter.

OppFi, a Chicago lender, wants to buy BNC National Bank in a roughly $130 million deal announced in April and expected to close in the fourth quarter. Its OppLoans product runs as high as 195% APR. The National Consumer Law Center says loans at those rates are banned in up to 45 states, depending on the size of the loan.

So why buy a bank?

The doctrine doing the work

Under the National Bank Act, and after the Supreme Court’s 1978 decision in Marquette National Bank v. First of Omaha, a national bank can charge a borrower anywhere in the country the rate allowed by the bank’s home state. Not your state. The bank’s.

Translation: the charter lets a lender bring its home-state rate into your state and lend under federal law instead of yours.

Rhode Island is the live test. Its 36% cap on small loans takes effect January 1, 2027, after a fight that ran close to fifteen years. OppFi’s own posted Rhode Island terms list 160% APR on loans of $500 to $4,000. If the charter clears this fall, that cap arrives in January and lands on a company that no longer has to follow it.

On July 31, the National Consumer Law Center and 122 other consumer, civil rights, legal services and community groups filed comments with the FDIC, the OCC and the Federal Reserve urging all three to deny the application and hold public hearings. Two weeks earlier, twenty state attorneys general, in a coalition led by Illinois’ Kwame Raoul, warned the same regulators that letting nonbank lenders buy banks would let them step around state usury laws nationwide.

The coalition’s filing doesn’t hedge: “OppFi’s lending program is risky, unsafe and unsound.” OppFi’s CEO Todd Schwartz says the acquisition “simplifies and strengthens our compliance and risk management.” Both statements can stand. Federal supervision and a state rate ceiling are different things, and only one of them limits what you get charged.

The number that explains the model

OppFi’s latest 10-K discloses a net charge-off rate of 51.4% of average receivables. More than half.

A normal lender doesn’t survive writing off half its book. This one does, because repayment isn’t where the money is. In the case the District of Columbia brought in 2021, DC’s attorney general said 75% of OppFi’s pre-tax income from OppLoans customers came from refinancing, borrowers rolling one unaffordable loan into the next. That matter settled that November: $1.5 million in refunds to more than 4,000 DC borrowers, over $640,000 in waived interest, and $250,000 to the District. OppFi denied wrongdoing.

Real money, and none of it from anyone paying off a loan.

Two things you can do

The regulators are taking comments on the record right now. The docket is public: FDIC #20260654, OCC 2026-Combination-3446751, published at 91 Fed. Reg. 42961 on July 13. If you live in a state with a rate cap you’d like to keep, that’s the address, and the NCLC filing is a template.

For your own borrowing, the move is duller and it works. Before you sign any small-dollar loan, find the APR, not the “fee,” and compare it against a credit union’s small-dollar or payday alternative product. Then check who actually holds the loan, because that line, not the logo on the app, decides which state’s law applies to you.

This isn’t an argument about whether high-cost credit should exist. It’s about who sets the ceiling: your legislature, or a lender’s choice of charter.

Three federal agencies answer that one from a comment file this month.

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