PROVIDENCE -- State regulators this week denied an application from a national chain, Check 'n Go, to open a "payday lending" store in the Olneyville neighborhood.

The ruling, signed Tuesday by the state's director of business regulation, A. Michael Marques, followed an outcry from local businesses and community groups, which argued that the proposed Check 'n Go would be harmful to the financial welfare of Olneyville, one of the city's poorest neighborhoods.

Payday lenders provide consumers with what amounts to cash advances, generally of less than $500, at interest rates that typically far exceed those charged by banks or mortgage lenders.

What makes payday loans attractive is that they provide easy access to credit for just about anyone with a bank account. A borrower simply writes the payday lender a personal check for the amount of the loan, plus the interest. The lender agrees to wait to deposit the check, typically until the borrower's next payday.

Rhode Island law allows payday lenders to charge up to 15 percent of the loan amount, so a consumer seeking a $100 loan would have to pay back $115.

Payday lenders differ from traditional check-cashing services, which charge a fee for cashing payroll, government or personal checks. In Rhode Island, both check-cashing services and payday lenders are licensed as check-cashers, regardless of whether they provide payday lending services.

Check 'n Go, a subsidiary of the Ohio-based Eastern Specialty Finance, operates 1,320 offices in 35 states -- including two in Rhode Island.

In April, state business regulators approved licenses for two Check 'n Go offices -- one at 1565 Post Rd., Warwick, and another at 1500 Diamond Hill Rd., Woonsocket

But an application for a third Check 'n Go, at 579 Atwells Ave., in Providence, prompted an outcry from local check-cashing businesses and community groups.

At a hearing in June on the license application, the president of Ocean State Check Express, Joseph Baginski, testified that Providence already has more than enough check-cashing agencies to serve the area and that four to six new check-cashing licenses were issued in the Providence metro area within the last year.

Ocean State Express operates a check-cashing store less than a half-mile from the proposed Check 'n Go site on Atwells Avenue.

Community groups whose members testified against licensing the new Check 'n Go were the Olneyville Collaborative, YouthBuild Providence and Rhode Island ACORN.

"Given the applicant's insistence that the company's middle-class customer is at the core of the demographics served by its product," the decision states, "the company's choice of locating in Olneyville is a curious one."

The decision cites 2000 census data showing that Olneyville is Providence's poorest neighborhood, with a median income of just under $19,700, compared with a citywide median of about $32,000.

"The applicant did not demonstrate that access to short-term credit would promote the needs of the community," the decision states, "or the public convenience and advantage."

The associate director of the Department of Business Regulation and superintendent of banking, Dennis F. Ziroli, and the deputy chief of legal services and hearing officer on the case, Michael P. Jolin, recommended that the director, Marques, reject the application.

Rhode Island and New Hampshire are the only two states in New England that allow payday lending, according to the Washington-based Center for Responsible Lending. Nationally, 11 states, including Massachusetts, Vermont, Maine and Connecticut, have outlawed the practice, said the research group's Ardie Hollifield.

larditi@projo.com/(401)277-7335