SPRINGFIELD -- An Illinois House committee narrowly approved major payday loan industry reform for the first time Tuesday, sending it to the full House where it awaits another tough fight.

The reform effort, which had stalled in previous years, finally passed through the House Financial Institutions Committee with the bare minimum 16 votes necessary. Six Republicans joined 10 Democrats in voting yes.

The proposal passed over strong objections from the Illinois Small Loan Association, which said the bill's many restrictions would force some of its members to close their doors.

A broad coalition of consumer advocates and other supporters celebrated its first victory in at least three years. Tuesday marks just the second time payday loan reform has made it this far since the first legislation was introduced in 1999. Lt. Gov. Pat Quinn also praised the committee's action in a statement released after the vote.

If the proposal (House Bill 1100) becomes law, businesses that offer short-term, high-interest loans would be subject to extensive regulations. Some high points:

*A maximum interest rate of $16 per $100;

*A cap on loans at 25 percent of a monthly salary or $1,000, whichever is lower;

*A 45-day limit on the term of a loan;

*A mandated installment-repayment plan.

For the first time, the association representing national payday lenders also supported the bill. "Lenders in Illinois can still make a fair profit," said Tony Colletti, lobbyist for the Community Financial Services of America, which represents national chain lenders. "Short-term losses will be offset by the long-term credibility and stability provided by this bill."

The bill's top proponent, Rep. David Miller (D-Dolton), promised more negotiations on the bill.

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