On October 31, the Ohio Division of Financial Institutions (DFI) issued updated Bank Partnership Guidance under the state’s Small Loan Act, reversing its earlier position from December 2024 and January 2025. The DFI had previously advised that any nonbank entity arranging consumer loans of $5,000 or less in exchange for compensation, including loans originated by federally insured banks, would be required to obtain a state license. The latest guidance withdraws that interpretation and pauses licensing and enforcement for the near term.
The DFI’s updated guidance clarifies the following:
- Licensing suspension for bank loan arrangers. Nonbank entities compensated for arranging bank loans, regardless of loan amount, will not be required to obtain a license under the Small Loan Act unless or until further notice.
- Exemption for interest-free small loans. Entities that make or arrange loans of $5,000 or less without charging interest are exempt from licensing requirements for calendar years 2025 and 2026.
- Non-enforcement of certain provisions. The Division will not enforce any provision of the Small Loan Act against activities newly exempted from licensure.
- No penalties for prior unlicensed activity. Entities that engaged in these activities in 2025 without obtaining a license will not face enforcement action.
Putting It Into Practice: The DFI’s reversal marks a significant development for marketplace lending platforms and other nonbank participants relying on bank partnership models. The updated guidance removes near-term uncertainty about licensing status in Ohio, providing regulatory relief while the Division continues evaluating its approach. Companies operating across jurisdictions should stay alert to further state-level developments, evaluate whether their current structures remain compliant, and prepare to adapt quickly as regulators refine or reassert oversight in 2026 and beyond.