I just joined a 'small' large bank that typically has less than 100 loans in their small business LAR annually. I have found another portion of loans that are secured by residential real estate and could be used as consideration during the exam under this "Other Secured Lines/Loans for Purposes of Small Business". I have never utilized this option with a bank before and was wondering if anyone could give me some intel on how these loans were actually treated in exams by the agencies. Is it an equal 1:1 credit or is it more like 'extra credit' or does it not really have that much impact?

CRA loan type 3, Other loans/lines for business, is intended to collect and compile small business loans that have been disqualified for a technical reason and offered by regulators as an opportunity to be used by banks for CRA examination purposes. A good example would be a revolving line of credit that is secured by AR and inventory and evidenced by a demand note that is "renewed" annually but doesn't meet the technical CRA definition of a "renewal" because the maturity date on the note is not changed and is not a "refinance" because no new note is issued (which would disrupt the continuity of the security interest and therefore new notes are not issued).

When we consult with banks for CRA analysis we recommend that they employ the optional CRA loan types (3-9) if any of those loan types contain a significant volume of activity. By this I mean they collect the data for activity for any of those loan types if they constitute at least 20% to 25% of the "normal" (small bus loans and/or HMDA mortgages) CRA lending activity. The official FFIEC CRA software and most commercial CRA software platforms allow users to collect and record such optional lending activity. It is important to note that all these optional loan types can be exported and presented for examination purposes, but they are never reported.