ISBs have the flexibility to choose between considering a loan as small business or as Community Development because ISBs have a separate Community Development component of their CRA Exam.
Large Banks lose that flexibility and must report all loans that meet the definition of "Small Business" as Small Business now matter how much Community Development is created by that loan. As an example, you make a $500,000 loan to a non-profit day care facility in a low income neighborhood whose mission is to provide child care and education to low- and moderate-income families and take a lien on the day care facility property.
Since the loan is secured by non-farm, non-residential real estate and the loan amount is not greater than $1Million, it meets the definition of a small business loan and you must now report it as a small business loan. Sure you could dress it up in your Performance Context and Self-Evaluation, and your examiner would probably give you an "attaboy" for it, but it won't be counted as Community Development.
If the loan were greater than $1MM, AND/OR if you did NOT take the property as collateral, then it would NOT meet the definition of small business loans (because loans to non-profit organizations are not classified as small business on your call report UNLESS the loan is secured by non-farm non-residential real estate) and therefore you could classify it as Community Development.
Regulations are a poor substitute for ethics.