License Requirement For Internet Company Brokering Business Loans - Q2 2000

By the Division of Banks

An internet company would allow a potential business purchaser to complete a questionnaire or a request for proposal on the website. The internet company would distribute the questionnaire to potential sellers of a particular product or service. One of the requests for proposals that the company will allow to be placed on its website relates to a customers lending needs. The customer is not charged a fee by the internet company client for submitting the questionnaire to the website.

There are no limitations on the types of business loans which a customer may request information from but the company expressly prohibits requests for consumer lending on its website. The company is targeting business/commercial borrowers and lessees of business equipment and does not intend to participate in any consumer financing programs. The issue is whether the activities of the internet company would be considered to be lending or brokering under the Massachusetts law and would a license be required to conduct such activities in the Commonwealth.

The Division has determined that utilizing an internet website to match borrowers and lenders ("customers" and "vendors" in your terminology) would certainly be an e-commerce form of loan brokering. The internet company will also be receiving compensation for providing the use of its website. It is the Divisions position that the internet company will not be required to be licensed as a mortgage broker or loan broker in the Commonwealth provided that is expressly limited to business lending and lease financing. In the event that the company expanded its website to include consumer financing for personal, family, or household purpose, then it may be required to obtain a license as a broker in the Commonwealth pursuant to Mass. Gen. Laws 255E.