The Wisconsin Assembly approved a bill regulating payday lending Tuesday, which is the first bill to regulate the industry in the state.

Payday loans are short-term, unsecured loans for small amounts borrowers promise to repay out of their next paycheck.

The bill caps the loans at $600 and prevents a borrower from taking out more than one loan at a time. It also bans rollovers of loans, a practice that many claim can keep a borrower in a cycle of debt.

“Right now we’re the only state in the union that doesn’t have regulations on this industry, and that industry has taken advantage of that,” Rep. Andy Jorgensen, D-Fort Atkinson a co-sponsor of the bill, said. “We need a strong bill to regulate what so far hasn’t been regulated in Wisconsin.”

The cost of borrowing (“annual percentage rate”) is usually very high, meaning that often borrowers spend most of their money repaying APRs without repaying the principle loan itself. Individuals who seek payday loans generally have no lower cost borrowing alternative.

The bill does not include an interest rate cap — an amendment capping the interest rates lenders could charge at 36 percent was killed during the session.

Rep. Jeff Fitzgerald, R-Horicon, said the bill is too harsh on an industry that is a necessity for many families in Wisconsin.

“Do you know what’s going on out there in the real world with unemployment, with people struggling to make ends meet?” Fitzgerald said. “You are taking a viable, legit business and an option away from people during the worst recession we’ve seen in 80 years. This is some people’s only option. You’re tone deaf to what’s going on out there. ”

Some groups, such as the Wisconsin Council on Children and Families, did not support the bill due to the fact that there was no APR cap.

“We have earned the dubious title of being the Wild West of the payday lending industry,” said Rep. Donna Seidel, D-Wausau. “We are telling the predatory lenders in this state that their Wild West days are over.”

According to Tom Liebe, vice president of government affairs for the Wisconsin Credit Union League, the need for quick, cheap lending alternatives in Wisconsin is a reality for many.

“There is a group of consumers out there who like the convenience; they like the ‘no questions asked’ of payday lending projects,” Liebe said. “If they don’t have it, the ongoing question is where will they go, because then they’re really in a bind.”