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#2216730 - 06/28/19 04:24 PM CRA small business - revenue for nonprofit
ljones9 Offline
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Joined: Aug 2018
Posts: 19
I hope I am over thinking this, but have to ask -

Assuming a loan to a nonprofit is nonfarm, nonresidential real estate secured and has a loan amount <$1MM therefore reportable as a CRA small business loan, is the revenue amount always $0 because its a nonprofit? Meaning we use Code 1 Less than or equal to $1MM in Revenues?

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#2216737 - 06/28/19 06:49 PM Re: CRA small business - revenue for nonprofit ljones9
Tennismom Offline
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Joined: Jan 2004
Posts: 762
Look at line 12 of the non-profit borrower's IRS Form 990 Return of Organization Exempt From Income Tax. That should be the revenue used on your CRA LAR.
Last edited by Tennismom; 06/28/19 06:50 PM.
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#2216738 - 06/28/19 06:49 PM Re: CRA small business - revenue for nonprofit ljones9
Moman Offline
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Posts: 505
WA
You might look at the FED - Dallas "CRA Loan Data Collection Grid" for the rules on nonprofits - see page 3. I always report the most recent year's gross annual revenues for a reportable nonprofit loan.

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#2218464 - 07/25/19 07:22 PM Re: CRA small business - revenue for nonprofit ljones9
Len S Offline
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Connecticut
Gross Annual Revenues ("GAR") are based on gross revenues, not net profit or surplus. So the fact that a non-profit makes no profit is not relevant to determining the GAR. Just retrieve the Gross revenues/receipts of the entity.
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#2218486 - 07/25/19 09:43 PM Re: CRA small business - revenue for nonprofit ljones9
mrogersfib Offline
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It's based on the gross annual revenue used in making the credit decision. So if Nonprofit A has a GAR of 100,000, but it is not enough for them to qualify for the loan they need. In response they get their parent Nonprofit B to act as a guarantor who has a GAR of 1,000,000 then our credit decision is based on a GAR of 1.1MM putting it outside of the scope.

This needs to be based on underwriting documents because sometimes they take exclusions from the GAR for their credit decisions.

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#2218980 - 08/01/19 10:56 PM Re: CRA small business - revenue for nonprofit ljones9
Len S Offline
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Joined: Oct 2004
Posts: 1,786
Connecticut
The revenue code has nothing to do with the loan potentially being a small business loan. It's the size of the loan that matters. Once it is determined it is a small bus loan then the GAR is used to distinguish small bus loans to truly small businesses. In this case, if the loan is <=$1million and it is to a non-profit and if it is secured by non-farm non residential real estate the loan would be reported as a small business loan and the GAR would be recognized based on what was considered for the credit decision (as you state). However, if you are undergoing a CRA exam using the ISB standards you would be allowed to select on a loan by loan basis how the loan would be treated for CRA PE purposes. So you could have it counted as a CD loan even if you had to report it as a small business loan.
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#2219004 - 08/02/19 03:44 PM Re: CRA small business - revenue for nonprofit ljones9
mrogersfib Offline
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I was just recently at an inter-agency meeting, and an examiner mentioned that if you look at the NAICS code, and if it says small business that they will consider that as a small business loan even if the GAR is higher than 1MM revenue. Thought that was an interesting tid bit, but I will personally continue to follow what the Q&A states that the GAR is based off of what is used during the credit decision process.

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