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#442945 - 10/18/05 07:53 PM CRA Consideration
Millie Offline
Junior Member
Joined: Apr 2003
Posts: 44
North Carolina
We have approved a loan for a non-profit organization that sponsors afterschooland summer activities for underprivileged youth. The purpose of the loan is a line for operating expenses. The county it is in is upper income bracket, however, the youth that utilize the facility are not wealthy. How can we determine if this is a CRA deal?

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#442946 - 10/18/05 08:10 PM Re: CRA Consideration
Don_Narup Offline

Power Poster
Joined: Jul 2001
Posts: 3,708
Las Vegas Nevada
Not wealthy can mean different things to different people. For Community Development purposes you will need to show a direct benefit to Low and Moderate income individuals .

Look to see if the borrower meets the qualification of a Small Business and take that as CRA credit instead of Community Development
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#442947 - 10/18/05 10:12 PM Re: CRA Consideration
CRAatBOK Offline

Power Poster
Joined: Mar 2004
Posts: 6,172
Further South than I wanna be.
If this is a nonprofit org. that has as it mission what you stated above, I would simply ask them for their guidelines for admitting youth into the program. If it requires that the majority be 80% or below of median income, count it as a CD loan. I believe the only way it could be small business is if it is secured by RE.
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#442948 - 10/19/05 04:56 AM Re: CRA Consideration
Len S Offline
Diamond Poster
Joined: Oct 2004
Posts: 2,143
Connecticut
KC is correct. Get charter of organization showing beneficiaries as low or moderate income people. Also get a statement from them about the use of the loan proceeds and the primary purpose if for LMI beneficiaries. If the loan is secured by real estate, it would be reportable as a small business loan (if $1 mil or under) and not as a CD loan. But if it is unsecured it wouldn't be reportable as a small business loans as KC points out and therefore may be reported as a community development loan if you have the documentation to support its community development nature.
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#442949 - 10/20/05 06:02 PM Re: CRA Consideration
HRH Dawnie Offline
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HRH Dawnie
Joined: Aug 2002
Posts: 7,353
Anchorage Alaska
I'd approach it a bit differently, but with the same outcome as Len states. I prefer to get their mission statement, and sometimes if that's too vague, details about the program, and then I document their efforts to track income levels. 51% must be LMI to qualify. I use a statement on my OCC submission that says something to the effect of "organization tracks income levels of the students using the program on an annual basis for grant funding. blah blah % were LMI in blah year".
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