BERKELEY -- New check cashing stores selling high interest "payday" loans face a ban or severe restrictions as the city joins a growing number of Bay Area jurisdictions cracking down on the businesses.

Berkeley City Councilman Jesse Arreguin, who authored a plan to draw up new rules on new stores in the city, said he did so because the stores "prey on our community."

"We want to change the laws to restrict the number and locations or prohibit them outright," he said. "Payday lending lobbyists have been successful on the state level at stopping laws restricting them, so we want to act on the local level."

California law allows the stores to charge up to 460 percent interest for a maximum loan of $255 for two weeks or 214 percent interest for a month. In 2007, Californian's took out 1.6 million loans worth $2.9 billion, according to the California Department of Corporations.

Berkeley will join at least a half dozen other Bay Area cities and counties including Oakland, San Jose and San Francisco where restrictions or bans have been placed on the businesses.

Bill Robinson, who was standing in a long line to get some cash at California Check Cashing Stores on Adeline Street in Berkeley last week, said he can see both sides of the debate around charging such high rates.

"It's a rip off and a gimmick to keep poor people poor," Robinson said. "But they're convenient for people like me who don't have a checking account. They give you money right away."

Berkeley currently has three check cashing stores that offer the loans, and under Arreguin's plan, they could stay and not be subject to the new rules.

Arreguin's plan, which the city manager and planning commission are now working on, considers several options including a ban on all check cashing stores in commercial areas, increasing the level of bureaucratic hoops a new store must jump through like public hearings, limiting the number of new stores in poor neighborhoods and establishing distance requirements between new stores and liquor stores, schools, churches and parks.

A California Senate bill that would have capped the number of loans to six per customer each year, died in a finance committee in April, leaving cities and counties to regulate them on their own.

A spokesman for the California Financial Service Providers Association said laws that restrict the businesses hurt consumers in the end.

"Our concern is that many will go to unlicensed, unregulated lenders on the Internet," Greg Larson said. "Consumers are best served when they have legitimate regulated services."

But Arreguin said not only do check cashing stores charge "exorbitantly high interest rates that put people in a negative cycle of debt, they also draw crowds of unsavory characters to neighborhoods.

"There have been some problems with people waiting in line to cash checks who are yelling, loitering and causing nuisances," Arreguin said. "The more we can restrict them, the less impact there will be on our community."

Doug Oakley covers Berkeley. Contact him at 510-843-1408. Follow him at Twitter.com/douglasoakley.