Lender's Licenses

"An entity must have a license to directly or indirectly engage in the business of making loans of $6,000 or less if interest and fees for the loan equal 12% per annum of the loan amount. This does not apply to certain open-end mortgage loans or certain sales finance loans. M.G.L. c. 140, §96; M.G.L. c. 255B, §2; M.G.L. c. 183, §28B

Loan companies and loan associations established by special charter, and fraternal mutual benefit societies the membership of which is limited to the employees of any one person and which make loans to its members only, does not need to obtain a license. M.G.L. c. 140, §114.

Trust companies, savings banks, co-operative banks, savings and loan associations, credit unions, national banking associations, federal savings banks and federal savings and loan associations or federal credit unions or any subsidiary are not subject to the small business loan license requirements; as long as they do not take, receive, reserve or charge interest, expenses and other considerations for a $6,000 loan or less. M.G.L. c. 140, §114A.

"The purpose of this section is to prohibit the unlicensed business of making small loans and to prevent an excessive rate of interest on such loans. Cuneo v. Bornstein, 269 Mass 232, 237 (1929).

Under M.G.L. c. 140, §§96-113, there is no such broad regulation and supervision of small loan businesses as there is over banks under other statutes, the purpose of §§96-113 being only to prohibit the unlicensed business of making small loans and to prevent an excessive rate of interest on such loans. Pioneer Credit Corp. v Commissioner of Banks, 349 Mass 214, 222 (1965). Therefore, it is not an unlawful discrimination to require small loans businesses to be licensed under M.G.L. c. 255B to operate as motor vehicle sales finance companies, and at the same time to allow banks and national banking associations to so operate without obtaining a license under c. 255B. Pioneer Credit Corp., at 223.

Under M.G.L. c. 140, §114A, banks and national banking associations need not be licensed as small loans businesses under M.G.L. c. 140, §96, the statutory pattern showing that banks and national banking associations are regulated more extensively than small loans businesses by other statutes, and that they are regarded for purposes of §§96-113 as being sufficiently qualified to operate as small loans businesses without being required to be licensed as such. Pioneer Credit Corp., at 223.?"