We extended a $500,000 revolving Line of Credit to a nonprofit professional theatre for the purpose of future/anticipated expenses associated with various performances & larger productions. The primary source of repayment will be from sales generated by annual performances and the LOC is secured by mutual funds & stock. Is this CRA reportable as Type 1? Thanks for your help!

No, non-profits are excluded from reporting unless the collateral is commercial real estate.

Since the loan is taking recievables. (Sales generated form the performances). This would be CRA reportable. If the loan had been assets of the non-profit then it would not be CRA Reportable.

It looks to me like the loan is not secured by receivables but rather is secured by "mutual funds and stock". It will be repaid by the collection of ticket sales. Either way, a loan to a non-profit is not a CRA small business loan unless it is secured by commercial real estate as pointed out by BS. Loans to non-profits that are unsecured or secured by personal property are not reported as C&I loans in the Call Report and therefore are not recognized as small business loans. This may be a candidate for community development loan consideration depending on facts.

don't hold your breath on the arts or recreation as CRA eligible...

least wise not with my examiners......

Thank Len read to far ahead. Would you agree that a loan to a non-profit that is secured by receiveable would be considered an C&I loan?

You can sometimes make a case if the group provides free lessons for low/mod income children. Many groups do, especially if in an urban area. Use of funds will come into play, of course. In this case, it doesn't look like that would fly.

Grants for that purpose can generally be counted.

Bubs, the Call Report instructions dictate that a loan to a non-profit that is not secured by non-farm non-residential real estate is to be reported under Item 9. This means a loan secured by receivables (personal property) is to be reported under that item thereby disqualifying it from being recognized as a small business loan for Call Report and CRA purposes.

As far as CD consideration is concerned, this may qualify under revitalize/stabilize if the non-profit is in a LMI tract. I have seen examiners give credit for such loan types.