We are a large bank and therefore will report all PPP loans according to the thresholds for small business ($1 million or less) and small farm ($500,000 or less). I would like to identify our PPP loans to nonprofit organizations because they are not secured by real estate or production payments and would qualify as community development (no dollar limit). A few questions.....

1) The non-profit must have a primary purpose of community development, correct? For example, Habitat for Humanity will qualify.
2) If it's community development, I must remove it from the small business/small farm data, correct?

These PPP loans are certainly making CRA reporting interesting this year.

1- the non-profit must be performing services that would meet one of the 4 CD definitions in the regulation and meet the primary purpose test (i.e., at least 50% of the beneficiaries must qualify as LMI persons or families). But, that's only one angle. Since the PPP loans are helping to preserve permanent jobs you could get them to qualify under that definition (Economic Development) even if the organization doesn't fulfill a qualified CD service. If it qualifies as providing a service and you are preserving jobs then you've hit a double on the loans!

2- all PPP loans that are <=$1 million must be reported as small business loans and will be evaluated as such unless you are being examined under the ISB standards in which case you get to select which test you want each loan to be under, the Lending Test or the CD test.

3- all PPP loans should also qualify as flexible and innovative (and complex) thereby earning extra credit so be sure to isolate them for that recognition.

I forgot to mention that for the economic development definition under CRA loans must be involved with permanent job creation, preservation, or improvement primarily for LMI persons, and also must be created by a business that passes the "size test". (GAR<=$1 million or sizes in SBA Part 121)