Worcester Business Journal

wbjournal.com | February 19, 2024 | Worcester Business Journal 13 required to report 81 data fields about each business loan applicant, compared to the current 13 data points specified in the Dodd-Frank Act, according to the Massachusetts Bankers Association. "Our members oppose discrim- ination in any form, and support enforcement of fair lending laws," MBA officials wrote in a statement to WBJ. "We are also worried that the data received could put small businesses' privacy at risk." MBA is concerned the publication of the collected data could expose sensi- tive personal and business information, potentially violating small business owners' privacy, raising fraud risks, and leading to the uncontrolled aggregation, sale, and use of their information. Data points associated with personal private information may not be com- fortable for business owners to share with lenders or third-party agencies, said Herald from the Small Business Development Center. Safeguarding personal information will be a big responsibility for banks and all involved in the data collection process and will require programs to ensure to both consumers and banks the reported data is protected, he said. "It's an evolution, and that's inevi- table," Herald said. "If this is the new path of requirements for adding new partners, that could be a great thing because we're getting governments, businesses, banks and a community working together." e new regulation could reveal which institutions are providing loans to minority-owned businesses, enabling these borrowers to seek financing from those specific lenders, Byers said. "It is an opportunity to change the dynamic for some lending institutions, and a chance for lending institutions to start really having an impact on a mi- nority of small businesses," Byers said. If the rule is enacted, Callahan said his coalition intends to provide a one-page handout to banks and their small business customers, clarifying that the collection of demographic in- formation is to gather aggregate data to address discriminatory lending practices rather than for individuals used by the bank. B A N K I N G & F I N A N C E F O C U S closely have been moving towards im- plementation, and understanding that, while it is an additional administrative burden, there are also some larger goals that the government is trying to get out of this disclosure act, in terms of reducing discrim- inatory lending," he said. In Worcester County, 21% of small businesses are located in areas with more than 50% minori- ty population, but only 12% of loans went to businesses in those same areas, according to data from the Woodstock Institute for the Partnership for Finan- cial Equity in Chicago. In Massachu- setts, 7.9% of loans went to businesses in low-income census tracts. Callahan said researchers are only able to analyze the distribution of loans based on where businesses are located. However, under the new rule, organi- zations would be able to analyze how many loans are given to women-owned or minority-owned businesses. In Worcester County, the Au- burn-based community bank Webster Five Cents Savings Bank made loans av- eraging more than $43,000 to businesses in low-income areas, compared to the $10,000 average loaned by credit card banks like Customers Bank in Pennsyl- vania, according to the data. Businesses owned by members of marginalized communities have a hard- er time obtaining loans for two main reasons: their lack of financial history or the inheritance of high credit scores, considered as indicators of financial reliability and success, said Byers. For small business owners unable to secure bank loans capital, microloans averaging $25,000 are available through the Small Business Association and Economic Development Administration lenders, such as the North Central Mas- sachusetts Chamber of Commerce. "We're a little bit more flexible, and we exist to help make these smaller loans that may be a little bit more riskier to a bank," said Roy Nascimento, cham- ber president and CEO. "We're willing to take another look at a prospective borrower and see if there's an opportu- nity for the loan to create some jobs or help revitalize a community." As an alternative lender, the chamber requires borrowers to demonstrate they have been rejected by traditional lend- ing sources before it can assist them. Concerns over the new law Enterprise Bank, a commercial trust institution based in Lowell, averaged loans more than $53,000 to small busi- nesses in Worcester County's low-in- come areas last year. Regarding the new loan data reporting rule, Enterprise said in a 2022 comment letter the require- ment for additional data submission imposes an undue burden by diverting compliance resources solely to data collection and reporting. "Community banks are already being stretched to their capacity in terms of cost and resources with respect to the recent flurry of increased reg- ulatory compliance requirements," Laura Feeney, compliance director and Community Reinvestment Act officer at Enterprise, wrote in the comment letter. Under the new rule, lenders would be W MEMBER FDIC 1 Annual Percentage Yields (APYs) effective as of 2/1/2024 and subject to change at any time after the account is open. The interest rate and annual percentage yield for your account depend upon the applicable rate tier. The interest rate and annual percentage yield for these tiers may change. The APY range assumes a maximum deposit of $50,000 for illustration purposes only. Fees may reduce earnings. The account does not have a maximum deposit limit. Refund of domestic ATM surcharge transaction fees are capped at $25.00 per statement cycle. Non-UniBank ATM Surcharges are those fees charged by the bank that owns the non-UniBank ATM used. If the eligibility requirements are not met the account will earn a lower interest rate and corresponding APY and will not be eligible for refund of ATM surcharge transaction fees. Minimum balance of $10 to open the account. Limit one account per customer holding position of primary account holder. Other restrictions may apply. • In order to be eligible for the disclosed Tier I and Tier II interest rate, Annual Percentage Yield (APY), and refund of domestic ATM Surcharges the following conditions must be met in a given statement cycle. • A minimum of 8 posted and settled debit card purchase transactions during the statement cycle. Not all pur- chase transactions post or settle on the day they occur. • Active enrollment in e-statements – you must sign into your online banking account at least once every 12 months to keep enrollment active. e by UniBank Checking Basic Rate of Interest APY 1 2.99 % Balances less than $15,000 2.99 % Balances $15,000 and above % 0.01 On entire balance when minimum requirements are not met -1.20 % APY 1 APY 1 APY 1 Open an account online at unibank.com or visit any UniBank branch! Checking with all the benefits. High-yield. High-tech. High-satisfaction. www.unibank.com 800.578.4270 Roy Nascimento, CEO of North Central Mass. Chamber of Commerce Tom Callahan, executive director of the Partnership for Financial Equity Top 10 Worcester County low-income small business lenders These 10 banks make the most loans of $100,000 or less to small businesses inside of Worcester County's low-to-moderate income Census tracts in 2021. Average loan to Bank business in LMI tract Enterprise Bank, Lowell $53,700 Webster Five Cents Savings Bank, Auburn $43,400 People's United Bank, Connecticut* $33,200 Santander Bank, Boston $32,900 TD Bank, New Jersey $24,500 Cross River Bank, New Jersey $15,900 Customers Bank, Pennsylvania $10,400 Lake Forest Bank & Trust, Illinois $7,300 Texas Capital Bank, Dallas $6,200 Wex Bank, Maine $4,300 *People's United Bank has been acquired by M&T Bank of Buffalo. Source: Small Business Lending Matters conducted by the Woodstock Institute for the Partnership for Financial Equity

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