§ ll.12(v)—3: Are loans secured by
nonfarm residential real estate to
finance small businesses ‘‘small
business loans’’?
A3. Typically not. Loans secured by
nonfarm residential real estate that are
used to finance small businesses are not
included as ‘‘small business’’ loans for
Call Report purposes unless the security
interest in the nonfarm residential real
estate is taken only as an abundance of
caution. (See Call Report Glossary
definition of ‘‘Loan Secured by Real
Estate.’’) The Agencies recognize that
many small businesses are financed by
loans that would not have been made or
would have been made on less favorable
terms had they not been secured by
residential real estate. If these loans
promote community development, as
defined in the regulation, they may be
considered as community development
loans. Otherwise, at an institution’s
option, the institution may collect and
maintain data separately concerning
these loans and request that the data be
considered in its CRA evaluation as
‘‘Other Secured Lines/Loans for
Purposes of Small Business.’’ See also
Q&A §ll.22(a)(2)–7.