The lending industry calls them small-dollar loans. Opponents call them payday loans. State House lawmakers approved a measure to regulate and expand the short term loan industry in the commonwealth.

Such loans tend to be issued with a two-week payback period, and they often come with high interest and fees. The small loans tend to be taken out for a couple weeks at a time, and they often come with high interest rates and fees.

Stephen Altobelli, spokesman for the trade group Financial Service Centers of America, says the small, high-cost loans are making credit available to people who need it. “While payday loans may be controversial, no one particularly disputes the fact that there is a large and growing need for small dollar lending. People need small loans to get them over the next two weeks, month,” Altobelli said.

He added that the bill would require short-term lenders to be licensed with the state, a provision that is important to the industry. “I think what we’re concerned about is a level playing field. We want an environment where everyone has to follow the same rules. Those rules are clear, so that everybody understands what the rules are. Those rules provide adequate consumer protections,” Altobelli said.

It may be controversial, but it does have its defenders. John Rabenold, a spokesman for the industry group Community Financial Services Association of America, said it’s better to take out a payday loan than it is to pay bills with a check that bounces.

“A single bounced check can run in hundreds of dollars in fees, and that’s what customers are trying to find alternatives to,” Rabenold said.

Opponents of the short term loans say such arguments are distractions, and that overdraft fees incurred with a bounced check are just as predatory as payday lending. They argue that the House proposal would increase the year-long interest rate of a short-term loan from the current cap of 24% to a figure in the triple-digits.

The borrower of a 2-week $500 loan would have to pay back $570.96.