[Mary Frances]

I’m trying to figure out if a “business purpose loan” in an individual name (not a dba or sole proprietor) is a covered transaction for reporting requirements. In the final rule the definition of the term business: Bureau is finalizing § 1002.106(a) as proposed, to define the term business as having the same meaning as the term “business concern or concern” in 13 CFR 121.105. This definition includes elements such as being “a business entity organized for profit” that has “a place of business located in the United States” and “operates primarily within the United States or . . . makes a significant contribution to the U.S. economy. Definition also provides that a business concern may take a number of different legal forms, including a trust, sole proprietorship, partnership, limited liability company, corporation, joint venture, or cooperative,… This has me believing that a loan to an individual (again not a dba or sole proprietor) would not be a covered transaction. Am I reading this correctly?

[Kimberly Boatwright, CAMS, CRCM]

This could be a gray area. The definition states “business concern”. Which could mean if they are getting a loan using their SSN ( which in some states is a Sole Prop or a DBA) it would be reportable. If I’m getting a loan to buy 5 cows to be fed and raised on my acreage that will be slaughtered and sold that could be viewed as a business concern. It is important that your procedures be created to address gray areas and how you will handle them. The rules did not differentiate between using a TIN or a SSN to define a business. Only speaks to GAR and loans, which they have defined purposes of the proceeds.

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• This reply was modified 1 year, 6 months ago by Kimberly Boatwright, CAMS, CRCM.

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