12/13/07 - report a small business line of credit for $500,000
3/12/08 - report the renewal of the $500,000 line
6/6/08 - Pay off this $5000,000 line (considered a refinance) & originate a new line (with new debt obligation) for $750,000

When we reported the 6/6/08 new line of credit, should we have reported only the increase $250,000 or should we have reported the total amount of the new line ($750,000)?

Thanks.

For 2008, you can report the $500,000 line and, separately, the $250,000 increase.

Or you can just report the $750,000 at 6/6/08. Your choice.

How do banks operationally handle this scenario?

For example, the 3/12/08 amount of $500,000 is reported as loan #123. The 6/6/08 amount of $750,000 is reported as loan #789.

How would I ever be able to determine that I only needed to report $250,000 under loan #789 since I had already reported $500,000 under #123?

There is a lot of manual filtering to review and adjust. I'm sure some slip through, but it is something banks need to think through to figure out how they will identify renewals and report correctly.

Honestly, I don't think that the controls I have in place would catch that.

At one bank where I worked, loan ops actually manually tracked refinances so that they were captured. A list was provided to compliance to use in reviewing the downloaded loans for reporting.

From the FAQ:

When reporting small
business and small farm data, however,
an institution may only report one
origination (including a renewal or
refinancing treated as an origination)
per loan per year, unless an increase in
the loan amount is granted. However, a
demand loan that is merely reviewed
annually is not reported as a renewal
because the term of the loan has not
been extended.

If an institution increases the amount
of a small business or small farm loan
when it extends the term of the loan, it
should always report the amount of the
increase as a small business or small
farm loan origination. The institution
should report only the amount of the
increase if the original or remaining
amount of the loan has already been
reported one time that year. For
example, a financial institution makes a
term loan for $25,000; principal
payments have resulted in a present
outstanding balance of $15,000. In the
next year, the customer requests an
additional $5,000, which is approved,
and a new note is written for $20,000.
In this example, the institution should
report both the $5,000 increase and the
renewal or refinancing of the $15,000 as
originations for that year. These two
originations may be reported together as
a single origination of $20,000.