For CRA Reportable Small Business Loans where the named borrowers are both an S Corp and an individual (who is also the principal of the S Corp)- how should the Revenue be reported. Both the revenue from the S Corp and the income of the individual were used in the credit decision but I'm not absolutely certain if I can report the combined figure for CRA purposes, since part of this figure is an individuals "income". I am getting hung up on revenue vs income. If the individual is generating "income" but the S corp is generating "revenue" can these two figures be combined for reporting GAR on CRA Reportable loans. Would anyone care to comment on this.

Interesting question. I'll take a shot.

As long as both parties are signers on the note (and the individual is not just a guarantor), then combine the GAR for the Corp. and the Gross Income for the individual.

You do not use income. You would use the gross annual revenue for the business only.

"Generally an institution should only rely on the <b>revenues<b/> that it considered in making the credit decision when indicating whether a small-business had gross annual revenues of $1 million or less." Page 13 A Guide to CRA data Collection and Reporting.

Bubs, that is not the answer I got from our Fed Examiners last month when we had similiar situations, just fyi.

Any other takers??

Yes.

Well don't worry, the next group will tell you that you are wrong in doing so.

I agree with Bubs. I have not been advised by any examiner otherwise. But as long as it appears in the Guide, and I can justify that as the reason we do it this way, then it is very hard for an examiner to claim otherwise.

With respect to section .42(a)(4)"Indicator of Gross Income", the 2001 Q&A states that "if an institution considered or relied on gross revenues of a cosignor or guarantor that is not an affiliate of the borrower, such as a sole proprietor, the institution should not adjust the borrower's revenues for reporting purposes." The Q & A goes on to explain that the "purpose" of the revenue data collection is to determine if banks are making loans to small businesses or "merely making small loans to larger farms and businesses". In that sense I would say that you should not include the revenue of the individual guarantor.

Thank you all for taking the time and respond and proving your feedback!!!!

Many thanks to all who reponded!