When is it acceptable to report 3-unknown for revenue?
Thanks.

Employee Loans, Loans where income was not used in the credit decision,

It is acceptable to use revenue code 3 if revenue information was not collected for the loan in question. CRA does not impose a requirement to collect revenue information, however if you have the information you must report it.

A revenue code is required for Small Business and Farm Loans. If you have to many "3" codes in these catagories examiners will ask you to rescrub and refile your data. The revenue code has a lot to do with the analysis of Small Business and Farm loans as you need to know loans that have $1,000,000 or less in revenue.

Again if examiners can't get a good analysis because you have a lot of "3" revenue codes be prepared to start looking them up and refiling.

Many times you might have a cash-secured loan where you are not relying on business income and therefore don't obtain the information. That would be a good reason to use a "3".

Of course, your BSA may start having conniption fits if you have not performed proper due dilligence to make sure your customer is not using the cash collateral as a money laundering tool.

Don, I disagree on using code 3 for Employee Loans. Code 3 should only be used for small business loans, and let's hope that a bank would not be making a small business loan to its own employee!

Since employee loans are generally consumer loans, you would use the Revenue Code of "4".

Bonnie There are Small Business loans being made to employees. Usually where a spouse has a business entity. A code 3 can be entered

A revenue code 4 does indicate a consumer loan. If the employee loan is a consumer loan a dollar amount is required, the bank can enter 0 which indicates the revenue was not used in the credit decision if they do want the employees income shown.

If an employee did have a business (or their spouse) and a loan was booked by the bank, a code of 1 or 2 is not a violation of their privacy in any fashion and as such we use the appropriate code to coincide with the business revenues. Revenues do not mean income, and if you have an employee running a multimillion dollar business I guarantee the folks at the bank already know this, a code 2 won't make a difference.

A bank can have code 3's but MUST be able to support why, expecially when they have several. But, there are reasons for having code 3's, for instance, in the case of a scoring system on small business loans that isn't using income as a calculation. In this case, numerous 3's on small loans within the perameters of the program would make sense. Additionally a program to new practictioners coming out of med school, where future earnings potential leads to the credit decision verses revenues would be another reason to have 3's.

In either case, remember that 3's mean no revenues were used in the credit decision. A bank with too many of these probably needs to think about safety and soundness more than they do a file scrub