§ 57 — Definitions applicable to Secs. 57 and 58; small business capital access program

Massachusetts § 57

• Jurisdiction: Massachusetts
• Part I: ADMINISTRATION OF THE GOVERNMENT
• Title II: EXECUTIVE AND ADMINISTRATIVE OFFICERS OF THE COMMONWEALTH
• Ch. 23A: DEPARTMENT OF ECONOMIC DEVELOPMENT

Text

Section 57. (a) For the purposes of this section and section fifty-eight the following terms shall, unless the context clearly requires otherwise, have the following meaning:''Agency'', the Massachusetts office of business development.''Borrower'', any business that receives a loan with respect to which a reserve is created in accordance with this section.''Business'', the carrying on of any business activity for profits, whether as corporation, partnership, sole proprietorship or otherwise.''Financial institution'', any bank, trust company, savings bank, savings and loan association or cooperative bank chartered by the commonwealth or any national banking association, federal savings and loan association or federal savings bank; provided, however, that the financial institution has its principal office, located in the commonwealth.''Loan'', without limitation, a sale and lease back, a financial lease, a conditional sale or any other arrangement that is in the nature of a loan.''Participating financial institution'', any financial institution participating in the program established by this section.''Program'', the small business capital access program established by this section.''Small business'', a business entity, including its affiliates, that: (i) is independently owned and operated; (ii) has a principal place of business in the commonwealth; and (iii) would be defined as a ''small business'' under applicable federal law, as established in the United States Code and promulgated from time to time by the United States Small Business Administration.(b) Each time a participating financial institution originates a loan to a small business borrower after the effective date of this section, said institution shall set aside an amount specified by the agency or its agent, referred to in paragraph (a) of section fifty-eight, which amount shall not be less than one and one-half percent nor more than three and one-half percent of the principal amount of the loan, into a loss reserve which said institution shall maintain applicable to all such loans by said institution to small business borrowers pursuant to the program.(c) At the time of the making of such loan to a small business borrower, the participating financial institution shall obtain from said borrower an amount equal to the reserve contribution made by the participating financial institution with respect to such loan as provided in paragraph (b) and shall set aside such amount into said loss reserve maintained by the participating financial institution applicable to all such loans by said participating financial institution to borrowers pursuant to the program. The participating financial institution may obtain such amount as payment from the borrower or may advance the amount to the borrower as part of the loan.(d) After such loan to a small business borrower has been made, the participating financial institution shall certify to the agency or its agent, in such fashion and with such supporting information as the agency or its agent shall prescribe, that it has made such loan and has set aside its contribution and the equal contribution of the borrower into said loss reserve.(e) The agency or its agent shall, after such certification as provided in paragraph (d) transfer to the participating financial institution an amount equal to the total of the contributions of the participating financial institution and the borrower or such additional amount up to one hundred and fifty percent of such contributions as determined by the agency or its agent, and the participating financial institution shall set aside such amount so received into said loss reserve.(f) In the event the participating financial institution suffers a loss on any such loan, it may in its discretion draw upon the funds in such loss reserve to repay the loan in whole or in part.(g) All amounts set aside by the participating financial institution into said loss reserve shall be deposited by it in an account at said institution. All earnings or interest on said loss reserve account shall be added to the principal of said loss reserve account and held as additional loss reserve; provided, however, that the agency or its agent may require at any time and from time to time that a portion or all of the accrued earnings or interest remaining in said loss reserve account be paid to the agency or its agent to be used to defray the costs of administering the program.(h) Any loan made under this program shall be used predominantly for business activities within the commonwealth.(i) No loan or loans in an aggregate principal amount in excess of $500,000 shall be provided to a borrower under the program and no small business borrower under the program shall be provided a loan under the program for passive real estate purposes.(j) Any financial institution desiring to become a participating financial institution shall execute an agreement in such form as the agency or its agent may prescribe, which agreement shall contain the terms and provisions set forth in subsections (a) to (i), inclusive and such other terms and provisions as the agency or its agent may deem necessary or appropriate.