[neldajapan]

Is CRA credit considered for donations /grants issued to organizations or ministries whose mission is to help bring youth closer to Christ? In this case, the funds help support summer camp fees for children and youth who attend Title 1 schools.

[jholzknecht]

A loan, investment or a service receives CRA community development credit is provided if the activity has as it primary purpose:
(1) Affordable housing (including multifamily rental housing) for low- or moderate-income individuals;
(2) Community services targeted to low- or moderate-income individuals;
(3) Activities that promote economic development by financing businesses or farms that meet the size eligibility standards of the Small Business Administration’s Development Company or Small Business Investment Company programs (13 CFR 121.301) or have gross annual revenues of $1 million or less; or
(4) Activities that revitalize or stabilize—
(i) Low-or moderate-income geographies;
(ii) Designated disaster areas; or
(iii) Distressed or underserved nonmetropolitan middle-income geographies designated by the Board of Governors of the Federal Reserve System, FDIC, and Office of the Comptroller of the Currency, based on—
(A) Rates of poverty, unemployment, and population loss; or
(B) Population size, density, and dispersion. Activities revitalize and stabilize geographies designated based on population size, density, and dispersion if they help to meet essential community needs,
including needs of low- and moderate-income individuals.

Your activity probably qualifies for credit. The fact that the students attend Title 1 schools helps with you case. Examiners probably expect documentation that the majority of the beneficiaries of the program are from low- or moderate-income families.

[neldajapan]

Thank you for your response. I have one additional question, please.

With reference to SBA PPP Loans: Are we required to use the payroll cost information found on the PPP loan forgiveness application in order to determine CRA credit eligibility? Would you please provide me with the supporting documents required to qualify a CRA eligible PPP loan. Currently, we documented and qualified these loans if they met the criteria regarding industry size standard data (NAICS) and industry wages found on BLS.gov. Is this process lacking payroll data for CRA eligibility, which was obtained at loan forgiveness time?

Below are the supporting documents currently attached to each loan:
BLS Wage Industry Data
2021 Income limits
Borrower PPP Application
NAICS Data
Company website profile (About page)

[jholzknecht]

On May 27, 2020 the federal regulatory agencies issued FAQS covering Consideration for Activities in Response to the Coronavirus Pandemic that state, “Generally, a bank should rely on and report the gross annual revenues that it considered in making its credit decision. Loans for which the bank did not collect revenue information may not be included when evaluating a bank’s performance in lending to businesses and farms with gross annual revenues of $1 million or less unless the small business or small farm provides supplemental information or the bank has another source demonstrating the borrower’s revenue, such as information on existing customers. Banks that have access to an applicant’s gross annual revenue information may, but are not required to, report that information. When evaluating CRA performance, the agencies will take into account the unique circumstances affecting borrowers and banks resulting from the COVID-19 emergency and will not penalize a bank for making a large volume of loans for which gross annual revenue information is not available. The agencies will also take into account a bank’s good faith efforts demonstrably designed to support low- and moderate-income individuals and small businesses and small farms and its efforts to comply with applicable consumer protection laws.”

[neldajapan]

Good Afternoon Jack:
Our bank has several loans given to individuals or corporations that are secured by notes receivable. These individuals or corporations borrow money from the bank to buy homes, which are then sold to “LMI individuals”.

Can these loans be given CRA credit consideration since the funds are indirectly being used to house low-to-moderate income individuals? My colleague is suggesting that I follow the money one step further from our customer.

Help 🙂

[jholzknecht]

In my opinion, this loan does not qualify for community development (CD) credit, but pitch it to your examiner any way. Who knows they might grant credit.

The basis for my opinion is that the loan is a HMDA reportable loan, and HMDA loans are not eligible for CD credit. The loan gets credit under the retail lending test.

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