I thought I read somewhere that you can count SBA 704 and Express loans under the Lending Test for CRA. Can you confirm where these types of loans fit into since they are a different program than the SBA 504 program.

I thought I read you could list those types of loans as "innovative and creative" for the lending test.

Thanks -

Any SBA program loans will be considered as flexible and innovative. However, not all SBA loans qualify as community development per se. Any SBA loan would have to meet the qualifications for community development as defined in the CRA regulations. This means they would have to involve job creation, preservation or improvement or revitalization/stabilization of LMI tracts or distressed or underserved areas (or designated disaster areas). Moreover, except for ISB's any such loan would have to be reported as a small business loan if it is $1 million or less. ISB's are given the option (if being examined under ISB performance standards) of choosing, loan by loan, CD-qualified loans that are also small business loans for examination purposes.

To piggy back on this, if you have an SBA loan that you renewed, would that potentially be reportable?

SECTION __.42(b)(2) – 5: Should institutions collect and report data about community development loans that are refinanced or renewed?

A5. Yes. Institutions should collect information about community development loans that they refinance or renew as loan originations. Community development loan refinancings and renewals are subject to the reporting limitations that apply to refinancings and renewals of small business and small farm

What about providing financing to small disadvantaged businesses?
*The firm must be 51% or more owned and control by one or more disadvantaged persons.
* The disadvantaged person or persons must be socially disadvantaged and economically disadvantaged.
* The firm must be small, according to SBA’s size standards

I know SBA 504s count but did not know about the loans above. Any guidance?

SBA 504's are about the only "slam-dunk" when it comes to qualifying as a CD loan - essentially because the Q&A says so.

Otherwise, a SBA 7A and other SBA loan products for the average Bank would only qualify as CD if the loan itself has a CD purpose (one of the 4 hooks), AND the loan is not otherwise reportable as a small business loan on the CRA-LR. For example:
- Loan is over $1Million and the loan will help a business hire or retain LMI workers or in an LMI area.
- Loan, regardless of amount, is considered to be secured by a 1-4 family dwelling and is not HMDA reportable (i.e. you have a junior lien position on the home and did not refinance any liens on the dwelling) AND the loan is helping stabilize, revitalize or increase or retain LMI jobs or LMI area.

You really do have to dig through the credit, talk with the loan officer and DOCUMENT, DOCUMENT, DOCUMENT.