If an institution considers the revenue of an individual co borrower (not cosigner) in making the credit decision, is this income to be used for determining annual revenue for CRA purposes?

How can an individual have revenues?

Well, that's a valid question. I was thinking along those lines with 1071 (let's not go there) but was not with this for some reason this morning. When I asked our regulator, I was told to use all income considered. When I read the guidance it stated not to use co signer or guarantor income, other than an affiliate. I could not specifically find anything regarding an individual co borrower.

Gently remind the examiner that individuals don't have revenues. Hopefully, you only reported the GARs of the business entity.

The regulator should not be using the term "income" in relation to CRA. Interesting.

Depending on what the money you're talking about is (revenue or income), I think it would probably be included. Examiner "income" statement is... interesting, but terminology aside, if you relied on money that this person had coming in through their business(es), then it should be included. Otherwise, what are you guys using for revenue for a loan to a sole prop? If the individual is a guarantor or co-signor, you don't include them, but if they are a borrower and you relied on revenue from their business(es), I'm not sure how you can exclude it. There is no brightline exclusion for an individual borrower.

You have revenue and you have expenses and the remainder is income. Income and revenue are apples and oranges. A person does not have revenue from a W-2 paying wage.

I don't disagree. I'm saying an individual borrower can and often does have revenues associated with their business(es) and those shouldn't be excluded simply because the borrower is an individual.

I am not arguing that point. The OP's question was: " is this income to be used for determining annual revenue for CRA purposes?"

"If an institution considers the revenue of an individual co borrower (not cosigner) in making the credit decision, is this income to be used"

I'm pretty sure we're on the same page. I'm just not sure if the OP is asking about revenue or income, and wanted to be sure they didn't think revenues could be excluded due to the borrower being an individual (like how they are if they are a guarantor).

Ok, glad to see a conversation happening here! The OP (me) was specifically looking at income from a co borrower, and if it should be included in determining the $1million threshold for revenue for a small business.

It sounds to me that you would include such income in the determination on how to code such a loan, unless the income is already being considered in the GAR for the primary borrower (the business).

The situation I am asking about in particular involves a business as the primary borrower and an individual with income derived from other non affiliate businesses. If I only use the GAR from the business, it would be considered a small business loan. If I were to include the income from the individual co borrower, that would throw it over $1million.

I too considered the fact that there was no specific exclusion in the regulation for a co borrower. This was the basis for my original question, and my confusion.

Please share your thoughts on this. I appreciate the discussion happening here!

And as a follow up, perhaps I am the one using the incorrect terminology. Does it truly make a difference in the answer? if we used a co borrower's W2 income from other non affiliated businesses, would that make a difference in the answer? Perhaps I do not understand the terminology. I am open to learning here as I was never really involved in this reporting until very recenlty.

"If I were to include the income from the individual co borrower, that would throw it over $1million."


I will repeat. Income is not revenue. Unless the person is operating as a sole proprietor and is reporting revenues on a Schedule C - they have no revenue. Income derived from other business interests is not revenue.

Thank you. I think I just needed you to slap me in the face with that answer. Income derived from other businesses is not revenue. I think that is what I needed to hear stated very clearly.