If we make a loan to a minority business owner who is in the process of creating jobs for individuals in a low to moderate income geography, and the business owner decides to pay more than minimum wages to some of these individuals, would that have an affect on whether the loan would be considered a community development loan? The business owner would pay more than minimum wages because of the skill level of some of the individuals is what I was told.

I would recommend documenting the # of FTE jobs and the job titles along with normal salary ranges for the type of job if available. I would not expect an examiner not to count this just because some individuals are receiving more than the minimum wage. If one job is created and it is an entry level job I would expect you can make an argument for CRA-Economic development credit. There is no rule that says all those hired must make less than minimum wages. If you have the documentation saying what the business will be paying for wages can they also provide what the salary ranges would be for someone starting with less experience.

CRA Padawan, this is good information. I will pass this along to the CRA Officer and see what we can come up with. Sorry but can you tell me what FTE stands for in your statement above? Thanks!

Sorry. I use to using abbreviations. FTE=Full time Employees.

No problem! Thanks again.

The definition of low-and-moderate-income, in most MSAs, far exceeds minimum wage.

Get the income ranges for all the jobs. There is a good chance most will qualify as LMI, as compared to 80% of the median family income for the geography.

Thanks Pale Rider. This is all helpful information.

The main thing I have found examiners are looking for in many cases, rightly or wrongly, are jobs at an entry level with minimal qualifications. Those jobs can provide for training to achieve better jobs over time. They are less likely to give credit for jobs requiring extensive prior experience or training regardless of pay.

We are a "Small Bank" and we report CRA and HMDA loans. So I have a question as to whether or not a loan could be classified as a Community Development Loan. If the bank does a farm loan for a vineyard and the owner hires several employees that fall into the category of LMI could we consider that as a community development loan? I think that it promotes economic development in our assessment area as well as benefits LMI individuals. We have no low-or moderate-income geographies in our assessment area. I would appreciate any clarification or examples of a farm loan that is a true CDL.