CRA and Reporting Loan Renewals

Issue/Inquiry

When a small business loan is renewed, should the original amount or the outstanding balance as of its renewal be reported on the CRA Loan Register?

Response Summary

The renewal of a small business loan is considered an origination and should be reported as such for that year. Unless there was an increase, the outstanding balance should be reported.

Response Detail

Under Interagency guidance, an institution should report the small business loans it refinances or renews as originations. It may report only one origination a year, unless an increase in the loan amount is granted. If the amount of the loan is increased when it is extended, the institution should always report the amount of the increase as an origination. The amount of the increase should only be reported if the original or remaining amount has already been reported that year.

For example, if a $25,000 loan has a remaining balance of $15,000 that is renewed, and the balance is increased by $5,000, the two originations should be reported together as a single origination of $20,000. Interagency Questions and Answers Regarding Community Reinvestment, §____.42(a)—5.

This indicates that, when a renewal is reported, the amount of the renewal will be the remaining balance of a closed-end loan. As in the above example, the renewal is an origination. The amount of the increase was added to the present balance of the loan, rather than the original amount of the loan. Had it not been increased, the amount would have been the outstanding balance of the renewal.

This entry was posted on Monday, March 25th, 2019 at 6:00 am.