Nebraska Enacts Law Expanding Scope of Installment Loan and Sales Act

On February 25, 2026, Nebraska Governor Jim Pillen signed Legislative Bill 717 (LB 717) into law.  LB 717 will expand the scope of the Nebraska Installment Loan and Sales Act (the “ILSA”) —Nebraska’s primary licensing law that governs the origination, making, and servicing of non-mortgage consumer-purpose loans—by raising the threshold loan amount for licensing under the ILSA, imposing new disclosure requirements for ILSA licensees,  and expanding the prohibition against making loans under the ILSA with a term in excess of 145 months.

The ILSA requires a license to (i) engage in the business of making “installment loans” subject to the ILSA; (ii) hold or acquire any rights of ownership, servicing, or other forms of participation in a loan or engage with, or conduct loan activity with, an installment loan borrower in connection with a loan; or (iii) market, own in whole or in part, hold, acquire, service, or otherwise participate in a loan made by a financial institution or an ILSA licensee. Under the current ILSA, a “loan” or “installment loan” is limited to a loan or extension of credit to a consumer originated or made with an interest rate greater than the maximum 16% annual interest rate permitted by Nebraska law, a minimum loan term of six months, and an original principal balance of less than $25,000.

Effective three months after the end of the 2026 legislative session—which is scheduled to end on April 17, 2026—the $25,000 loan amount trigger will be removed from the meaning of a “loan” or “installment loan” in the ILSA.

Currently, the state’s general usury rate of 16% per year does not apply to loans made when the aggregate principal amount of the indebtedness is $25,000 or more of the borrower to any one financial institution, licensee under the ILSA, or permittee operating under a permit issued by the Nebraska Department of Banking and Finance. However, LB 717 makes a conforming change to raise this threshold from $25,000 to $100,000.  Thus, the threshold loan amount for licensing under the ILSA will, when LB 717 takes effect, effectively increase from $25,000 to $100,000.  In effect, absent an exemption, an ILSA license will be required once LB 717 becomes effective in order to make a consumer-purpose loan for less than $100,000 with a term of six months or more with an interest rate in excess of the applicable Nebraska statutory usury rate or engage in other regulated activities with respect to such a loan.  Accordingly, entities that currently make, or engage in other regulated origination, servicing, or acquisition activity with respect to loans of $25,000 or more but less than $100,000 with an interest rate exceeding 16% per year without a license under the ILSA should evaluate whether to apply for a license before LB 717 becomes effective.

Concurrent with the effective date of the changes discussed above, ILSA licensees that originate loans to refinance an existing residential mortgage loan will be required to disclose on a worksheet prescribed by the Nebraska Director of Banking and Finance whether or not a borrower will received a net tangible benefit through any refinance of an existing residential mortgage loan. (While the ILSA is primarily a non-mortgage consumer loan regulatory law, ILSA licensees have authority to make residential mortgage loans in certain circumstances.)  Tangible net benefit is defined to mean a benefit of a refinance that will be in the financial interests of the borrower and includes, but is not limited to, (i) obtaining a lower interest rate, lower monthly payment, or shorter amortization schedule; (ii) changing from an adjustable interest rate to a fixed interest rate, (iii) eliminating a negative amortization feature, balloon payment feature, or private insurance, (iv) receiving cash out from the new loan in an amount greater than all closing costs; (v) avoiding foreclosure; and (vi) consolidating other existing loans into a new loan.

In addition, effective as of the passing of LB 717, ILSA licensees will be prohibited from making loans for a period in excess of 145 months (except for loans secured by mobile homes), regardless of the principal amount of the loan, whereas the current prohibition only applies to loans of $3,000 to $25,000.