We have had a loan to an LLC that renewed twice in 2010. The initial renewal used 2008 revenues (2009 was not available at that time). The subsequent renewal was done recently and the loan amount decreased. The Gross Annual Revenue figures were also available at that time for 2009; they had shrunk from more than 1MM to less than 1MM at the second renewal. What should be reported for CRA Small Business purposes? The new and reduced loan amount and the new renewal date and the revenues as less than 1MM, or the original figures? I would think one could not mix and match the fugures, and that all fields should represent the second action.

Moman,

What was the purpose of the first renewal? Was it merely an extension of the due date to gather the financials?? If so I would go with the new lower loan amount and revenues since that's the GAR from the most recent tax return.

This is just my opinion and how I handle these.

Whatever it is you decide on, be sure to have a good explanation of why you did it that AND BE CONSISTENT. In otherwords, if you have other loans that have similar circumstances, use the same method of determining which loan to report for all of them.

The regulation does not say anthing about which renewal to use. So you can go with the first one in the year, or you can go with the second renewal.

The only thing the guidance addresses is for subsequent renewal in same year, you can report original and second (new money only, if increase) or report new and increase as one (amount of second). For a decrease, the first loan reported stands as already reported.

Because many banks start to gather CRA towards year end, and have update the GAR in their system, they probably would not even catch that the GAR went down and capture the loan as a small business loan.

Because you have knowledge that the first loan as it was made did not qualify, you could justify reporting the second as a small business loan, for the reduced amount. Just keep your documentation of how this transpired!