My bank extended a loan to two individuals who operate a diner. The diner is located in a building that contains two commercial spaces (one being the diner) and two apartments (located in the basement). The square footage of retail space vs. the square footage of apartment space are virtually identical. The individuals purchased the building with the loan proceeds and neither one lives in either of the basement apartments. The loan is reported as a small business loan in our Call Report; however, I keep reading that loans secured by residential properties can not be considered business loans for CRA reporting purposes. Any ideas on how this should be reported/coded? Thanks for any help!

I'm leaning towards the commercial side. How is the property zoned?

I've found lots of info on how to categorize loans from the fed's website, such as FFIEC's. There was a great Q&A that was available that basically answered all your Q's regarding CRA loans and their treatment. Maybe someone can point you in the direction that I am refering. Search the web...

The property is located on the town's main thoroughfare, so I believe that it would be zoned for commercial use, though I can't say for certain.

Pull the file and look in the title report for that information. I can provide you with a couple of links mentioned by the last poster, but I think it might put you back where you are now. One other option is to call your regulator directly. I have a strong relationship with mine and call when I'm in a pinch.

It sounds to me like the apartments were an after thought(Basement) to a commercial property but you know about them now so you still have to deal with the issue of course.

http://www.ffiec.gov/cra/guide.htm
http://www.dallasfed.org/htm/pubs/pdfs/ca/craloan.pdf

It feels like commercial to me still, it's two basement units, but it's 50/50 sq ft. I'm coming close to changing my mind to HMDA too. Get the zoning from the file and if your regulator isn't available I'd be happy to call mine