Under a new partnership between Needham Bank and the town of Ashland, local officials will refer small businesses in search of credit to Needham Bank, which is offering two years of interest-free loans partly paid for with taxpayer dollars. Photo courtesy of the town of Needham.

If there is one commonality between community banks and municipalities in Massachusetts, it is that they both love small businesses – communities need them to create a thriving downtown that their residents want to be in, while community banks depend on them for business. 

Now, the town of Ashland and Needham Bank are taking this commonality to the next level with a first-of-its-kind public-private venture that should help attract new businesses to Ashland’s downtown and generate new small business loans at Needham’s Ashland branch. 

Through the partnership, potential small business borrowers will submit applications through Ashland’s Office of Economic Development. An advisory group will review the applications and if they are deemed to meet program requirements, the town will refer applicants to Needham Bank for credit underwriting and processing. 

How It Works 

Qualifying small businesses will be able to obtain up to two years of interest–free financing. Sixty percent of the imputed interest will be covered by taxpayer funds from Ashland, while the remaining 40 percent will be covered by the bank.  

Because Ashland is appropriating taxpayer funds to private entities, the program required special state legislation before approval.  

“The relationship between the entrepreneur, the town and the bank is really to find a way to get something done,” Needham Bank CEO Joe Campanelli said. “We are seeing resurgence of small business in all communities where people still want something unique, and we wanted to see how we could become a catalyst to create more small business opportunities, which is true to the core of being a community bank.” 

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The program will have an initial cap of $50,000 for loans, meaning the bank and the town will absorb imputed interest of up to $10,000 per borrower or individual loan. 

However, the imputed interest can increase to $20,000 if both the bank and town agree but it is not anticipated to increase to $20,000 per loan and $100,000 in the aggregate for the program. Potential borrowers must be creditworthy and may be required to receive funding through Needham Bank’s SBA program, all subject to the bank’s underwriting criteria for similar loans.  

The goal of the program is to draw businesses such as breweries, restaurants, professional services and businesses in the medical, manufacturing and engineering spaces. 

Needham Bank’s partnership with Ashland represents a good marketing opportunity for the bank, which could potentially attract new depositors as well as new business borrowers.

How the Program Came to Be 

The town of Ashland has been looking for ways to revitalize its downtown for some time, having launched two other programs aimed at providing financial assistance to local business for signs and facades as well as some rental assistance. 

But the new loan program is expected to be the biggest help yet, said Ashland Town Manager Michael Herbert. 

“In general, one of the obstacles we’ve seen here in Ashland for getting new businesses here or getting businesses to expand is the cost of capital,” he said. “This is a way we can help contribute to business growth and development in town. It’s a good investment of taxpayer funds because the more businesses we have the more our tax base grows. We see it as very smart investment.” 

Needham Bank controls the smallest share of deposits in Ashland, ZIP code 01721, at just over 6.3 percent. 

There are four other big players including Middlesex Savings Bank, Bank of America, Santander and TD Bank. Middlesex Bank controls the largest deposit share of the market with more than 34 percent, according to the FDIC. 

But ever since the $2.17 billion–asset Needham Bank opened a branch in Ashland, Herbert said the bank’s community involvement has been exceptional. 

“When they came into Ashland in 2014 to a property that was tired, they invested a lot of their own money to make it a nice property in the center of town. Ever since then, they have been part of the community and have always been willing to sponsor and host events for us,” Herbert said, adding that the branch manager Denise Loiselle is ubiquitous in town. “I really did not think of any other bank.” 

A Smart Business Decision 

Campanelli said he is excited about the new loan program because it can help the bank achieve its mission of investing in the communities it serves, while also attracting new customers. 

Bram Berkowitz

The partnership presents an excellent marketing opportunity for the bank, confirmed Jon Hurst, president of the Retailers Association of Massachusetts. 

While any small business with a solid plan can typically get easy access to credit, this program can help Needham Bank stand out among its competition and get a foot in the door with Ashland’s commercial community. Small businesses tend to be loyal customers, Hurst said, which may lead to other opportunities for the bank, whether with a business seeking a loan or the people that operate it. 

“If you establish a standard of wanting to invest in the community and your employees and customers, people will remember,” he said. “It’s a growth opportunity.”