MENLO PARK, Calif. — Payday loans are costly, habit-forming and often bad for consumers' financial health. Still, they've proven hard for other lenders to compete against.

Today, one of the largest-scale challenges to the industry is being mounted by Progress Financial Corp., which markets its small-dollar installment loans to Hispanic consumers. The company, which operates under the name Progreso Financiero, runs 109 stores in California, Texas and Illinois.

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