Let's assume a commercial lender makes a loan to a customer whose husband is a farmer. The wife, however, runs a chiropractic business full time. The loan for $250K is to the chiropractor for office improvements. The loan is being collateralized with farm land, from the husband's farm (he signs as guarantor).

The call report code is 1b, since the loan is secured by farmland. Of course, the purpose of the loan is expressly business purpose. Since the call report code is 1b and is reported as such on the report of condition, this loan's CRA Type Code should be a '2 - Small Farm', correct?

It seems out there to call it a small farm loan, but on the call report, that is how it flows to the memo schedule. Am I on the right track here, or am I overthinking it?

You are on the right track.