I have a loan of a business purpose for an individual. The bank has asked a company to be the co-signer on the loan. Do we include the co-signer's income when we report the income figure? I could not find anything specifically related to business loans in the reg related to this question. Looked in Q & A too.

Forgive me Tom, I'm going to step up on a soap box and beat a drum for a second You can do the same thing to your lenders when you finish reading this

In the world of CRA and HMDA we have two terms.

Income, which people earn
Revenue, which businesses earn

The two are never added together and they are never reported in the place of each other.

If this deal is a small business loan the only question you have is in regards to REVENUES do you report them or not? As a lender, I'd say if they weren't comfortable with the individual's ability to repay, thus requiring the other business, then the lender is looking to that business as a repayment source. For that reason I would choose to report the REVENUES of the co-signers business as there is obviously a connection between the two entities.

Your other option, report the business revenues of the individuals business from the prior year if they were relied upon in the credit decision. Not his income though, just the gross revenues!

One final option I wouldn't take, but you can consider If he is a new business with no revenues and the cosigner wasn't somehow related to the repayment, you could report a code 3 (revenues unknown or not relied on in the credit decision). I'd not lean towards this one because it sounds like someone's revenues were relied on (hence the request for the cosigner).