A Guide For Massachusetts Small Businesses

by the Division of Banks

Foreward

This guide will help familiarize you with the Small Business Loan Review Boards and the appeal process.

The Small Business Loan Review Boards provide a valuable independent second review process for denied applicants who believe that they were unfairly turned down for a small business loan.

The Boards are not affiliated with any lending institution and do not provide either financial or technical assistance to any businesses. However, if requested, the Administrative Secretary for the Boards will provide information regarding organizations or agencies which provide assistance to small businesses.

If after reading this brochure, you have additional questions regarding the Small Business Loan Review Boards or the appeal process, please contact the CRA and Outreach Unit of the Division of Banks at (617)956-1500, extension 501. (Outside the Metropolitan Boston area call 1-800-495-BANK). You may also write to the Board at the following address:

Administrative Secretary
Small Business Loan Review Boards
1000 Washington Street, 10th Floor
Boston, MA 02118-6400

About the Small Business Loan Review Boards..............

The Small Business Loan Review Boards were formally established by the Massachusetts Legislature in 1990 (Massachusetts General Laws Chapter 167, section 14C) as a means to monitor the availability of credit to small businesses throughout Massachusetts.

The Boards provide an independent review process for any small business loan applicant who has been denied. The Boards are comprised of lenders and business representatives appointed by the Commissioner of Banks. Board members are not compensated for serving on the Boards. Any Board member with a conflict of interest relative to a particular loan application is disqualified from that review. Also, Board members must disqualify themselves from consideration of any loan application to his/her employer.

The Commissioner of Banks appoints an employee of the Division of Banks to serve as the Administrative Secretary for the Small Business Loan Review Boards. The Administrative Secretary is responsible for receipt of appeals, requesting files, and coordinating Board meetings. The meetings of the Board are private and any information concerning a particular applicant is kept strictly confidential. At the end of the meeting, all copies of loan files are collected by the Administrative Secretary and destroyed.

The following provides answers to some of the questions you might have regarding the Small Business Loan Review Boards and the appeal process.

COMMON QUESTIONS

What types of loans are eligible for review by the Small Business Loan Review Board?

The jurisdiction of the Board extends to denied small business loan applications to businesses located in Massachusetts with gross revenues of $1 million or less in its preceding fiscal year. The types of loans eligible for review include lines of credit, term loans, overdraft protection on corporate accounts, and corporate credit card requests.

The jurisdiction of the Review Boards does not extend to requests for the acquisition or refinancing of commercial real estate or investment properties.

What happens once I file an appeal?

When an appeal is received, the Administrative Secretary will contact the lender requesting that copies of the entire loan package be forwarded to him/her at the Division of Banks. Once the loan package is received, it is presented to the Board at its next scheduled meeting for review. You will be notified by mail of the Board's decision.

Who serves on the Small Business Loan Review Boards?

Chapter 167, Section 14C of the Massachusetts General Laws provides that each Board shall consist of five members appointed by the Commissioner of Banks, three of whom shall be small business representatives and two of whom shall be representatives of banks or bank holding companies. At least three of the members of each Board shall either live or work within the respective region.

How many Review Boards are there?

The statute provides that there shall be four regional Small Business Loan Review Boards operating in the Commonwealth. There is the Boston Metropolitan Area Board which includes the counties of Suffolk, Essex, Middlesex, and Norfolk; the Southeastern Massachusetts Board which includes the counties of Bristol, Plymouth, Barnstable, Dukes, and Nantucket; the Central Massachusetts Board which includes Worcester County; and the Western Massachusetts Board which includes the counties of Franklin, Hampden, Hampshire, and Berkshire.

What happens during the Review Board Meetings?

The members of the Board will review each small business loan denial to determine if an application was denied on an unreasonable basis. Based on the information contained in the loan file, the Board will vote to either agree with the lender's decision to deny the loan, or will vote to recommend that the lender reconsider the loan request.

Will I have an opportunity to go before the Board when my loan is reviewed?

The Small Business Loan Review Board makes its decision based on the information contained in the lender's loan application file. Neither the applicant nor the lender are present during the Board meeting. However, the applicant can submit written materials describing any circumstances or facts related to his/her application. These written materials will be included with the loan package presented to Board members.

How long does the appeals process take?

The Review Boards meet on an as needed basis depending on the number of appeals awaiting review and the availability of Board members. In the majority of cases, loans are reviewed by the Board within 60 days of receiving an appeal.

If the Board votes that a loan should be reconsidered, does that mean the lender is obligated to grant my loan request?

No. While the Board can make a recommendation that a lender reconsider a small business loan denial, it does not have the authority to grant, approve, or guarantee any loan for any lender. However, lenders are encouraged to abide by the Board's decision.

What happens if the Board votes to agree with the lender's decision to deny my small business loan application?

This ends the matter at the Review Board level and the appeal is considered closed. However, if requested, the Administrative Secretary will provide you with the names of additional resources that assist small businesses.

What rights do I have if I believe that my loan application was denied on a prohibited basis?

An applicant who believes that his/her loan application was denied on a prohibited basis (i.e. on the basis of race, color, religion, national origin, ethnic origin, sex, marital status, age, income derived from public assistance, sexual orientation, or handicap) may proceed independently of the Small Business Loan Review Board by contacting the Massachusetts Commission Against Discrimination (MCAD), One Ashburton Place, 6th Floor, Boston, MA 02108 - (617) 727-3990 ext. 557

RESOURCES

While the Board does not provide financial or technical assistance for small businesses, there are other resources which are available.

The Massachusetts Department of Economic Development and its offices and divisions offers a variety of resources to assist both existing and emerging businesses. The Massachusetts Office of Business Development, through its agent the Massachusetts Business Development Corporation, administers the Captial Access Program (CAP) and can provide you with information on available financing and technical assistance programs to assist small businesses. Agencies such as SCORE (Service Corps of Retired Executives), Jewish Vocational Services, and the Small Business Resource Center of the University of Massachusetts can provide technical assistance in preparing a financing request.

Various loan guaranty programs are also available through the US Small Business Administration (SBA).

City and town governments occasionally offer technical and financial assistance to small businesses. Check with the economic development department of your local city or town hall to learn about available programs. Your local Chamber of Commerce may also be a good source of information on available programs.