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#2190364 - 08/23/18 06:07 PM SBA 504 - CDC Loan Committee
Mel in WA Offline
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Joined: Mar 2013
Posts: 1,122
Our Chief Credit Officer is a volunteer on the loan committee for a Certified Development Company (CDC) SBA 504. He reviews/votes on SBA 504 applications submitted by banks throughout the State. Would this qualify as economic development under the service test?

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#2190373 - 08/23/18 06:30 PM Re: SBA 504 - CDC Loan Committee Mel in WA
Tennismom Offline
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Tennismom
Joined: Jan 2004
Posts: 764
Yes ---- SBA 504 loans promote economic development and help create and retain jobs.

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#2190436 - 08/23/18 09:17 PM Re: SBA 504 - CDC Loan Committee Mel in WA
Princess Romeo Offline

Power Poster
Princess Romeo
Joined: Jun 2001
Posts: 8,272
Where the heart is
One of the few "slam dunks" for CRA Service Credit!
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#2198120 - 11/13/18 08:44 PM Re: SBA 504 - CDC Loan Committee Mel in WA
Mel in WA Offline
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Joined: Mar 2013
Posts: 1,122
Related question about SBA 504 loans. We are a large bank and therefore 504s must be over $1 million in order to qualify as community development. Does each loan - bank and CDC - need to be over $1 million or is it the total? For example, if the bank's portion was $500,000 and the CDC $600,000, would that count? They are to the same borrower, but we book each portion under different loan numbers, so I'm not sure.

Thanks!

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#2198150 - 11/14/18 04:10 AM Re: SBA 504 - CDC Loan Committee Mel in WA
Len S Offline
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Joined: Oct 2004
Posts: 1,848
Connecticut
It's the loan size that matters. If this were a participation in a $1.1 million loan then it would not be a small bus loan and could be reported as a CD loan. But in this case there are two totally distinct loans and your loan is under $1 million so it must be reported as a small business loan unless some other factor would disqualify it as a small business loan. I would encourage you to collect information on loans like these to share with examiners who may take into consideration these loans to temper their judgment about your CD lending performance if you engage in a substantial volume of loans such as these.
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#2198210 - 11/14/18 06:58 PM Re: SBA 504 - CDC Loan Committee Mel in WA
Mel in WA Offline
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Joined: Mar 2013
Posts: 1,122
Thanks Len S!

Would SBA 7A loans over $1 million also qualify as a CD loan under economic development? We are an approved lender and actively working to increase this line of business.

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#2198298 - 11/15/18 04:46 PM Re: SBA 504 - CDC Loan Committee Mel in WA
Mel in WA Offline
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Joined: Mar 2013
Posts: 1,122
Bump

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#2198960 - 11/24/18 04:43 AM Re: SBA 504 - CDC Loan Committee Mel in WA
Inspector Offline
Gold Star
Joined: Apr 2016
Posts: 255
SBA 7A loans may qualify as a CD loan but they are not the "slam dunk" that SBA 504s are.
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Opinions expressed are my own and do not reflect legal advice or the opinions of my employer.

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