DOVER - A bill limiting the amount of short-term consumer loans, also called payday loans, an individual can take out to five in a 12-month period passed the Senate Thursday and will now head to the governor's desk for a signature.

The bill passed with a 20-1 vote. Sen. Michael Katz, D-Centreville, was the sole opposition to the bill.

House Bill 289 also changes the definition of a short-term consumer loan to include loans up to $1000 rather than $500 and provides for the establishment of a database to track the number of short-term consumer loans an individual has obtained in a 12-month period.

Paul Calistro, executive director of the West End Neighborhood House in Wilmington, said he has witnessed how payday loans can cause financial problems for individuals already struggling.

"We have seen thousands and thousands of people come to us caught in a cycle of payday loans, all of them working, all of them struggling and after months and months of payday loans, they are in more debt than when they started," he said.

Sen. Colin Bonini, R-Dover South, said he too has seen the impact of payday loans, having had a close friend take several out and end up owing more than two times the amount they took out in the loans.

"It became truly impossible for this person to get out," he said.

Michael Beattie, who owns a consumer loan company in Wilmington, argued that if HB 289 is signed into law it will cause those individuals working for the companies to lose their jobs.

"Unless corrective action is taken before the implementation of this bill, this piece of legislation will absolutely eliminate jobs in this state," he said.

If individuals have already taken out five loans, Sen. Robert Venables, D-Laurel, said he doesn't understand how loan companies could be losing enough money to force layoffs.

"Maybe I don't understand payday loans but I think if you've rolled over five times, you've already made enough money," he said.

Gov. Jack Markell said he intends to sign HB 289 when it reaches his desk.