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Industry Letter: Financial Standards for Small Loan Companies

Industry letter to provide guidance and clarification of the Division’s policy as it relates to the evaluation of licensees’ financial responsibility as part of the Massachusetts annual license renewal process.

Table of Contents

March 25, 2022 Industry Letter

March 25, 2022

To the Chief Executive of the Small Loan Company Addressed: 

The Massachusetts Division of Banks (Division) has issued this Industry Letter to provide guidance and clarification of the Division’s policy as it relates to the evaluation of licensees’ financial responsibility as part of the Massachusetts annual license renewal process.

Small loan companies are required to demonstrate an adjusted net worth of at least $75,000 at the time of license renewal, pursuant to 209 CMR 20.03(2)(a)1.  Licensees are reminded that this is a regulatory requirement, and that the Division will reject renewal applications from small loan companies who fail to demonstrate the minimum net worth.

Moreover, small loan companies are reminded that, pursuant to 209 CMR 20.03(2)(b)3, an applicant for a license renewal shall submit unconsolidated, entity only financial statements, which have been either audited or reviewed by an independent Certified Public Accountant, within 90 days of the close of its most recent fiscal year.  At the discretion of the Commissioner and under such conditions as the Commissioner may impose, a licensee may submit unaudited entity only financial statements with its parent's audited consolidated financial statements within 90 days of the close of its most recent fiscal year.  Please refer to the regulation here for further information regarding the required scope and contents of submitted financial statements.

A licensee’s failure to provide financial statements that meet the specific criteria set forth in 209 CMR 20.03(2)(b) may result in nonrenewal of a license, or the restriction of a licensee’s ability to apply for a license renewal through the Nationwide Multistate Licensing System and Registry (NMLS). 

Should you have any questions related to this Industry Letter, please contact Deputy Commissioner Andrea L. Cipolla at (617) 956-1532, or andrea.cipolla@mass.gov.

Sincerely, 

Christopher R. Pope

Senior Deputy Commissioner

Non-depository Institution Supervision

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