I understand banks were not required to obtain GAR for the PPP loans. If the borrower provided a P&L with their payroll documents should we record the GAR or use unknown? If they are existing loan customers and we have their financials in our imaging system from previous loans should and we know what their GAR should we be coding it appropriately over $1 million, under $1 million or use "unknown."

If you have the GAR information use it. If you don't have the information you won't be penalized (except that if the PPP loans are examined under the lending tests and you did a lot of loans to truly small businesses (<=$1 MM GAR) you would not get credit under the "borrower characteristics" test.

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When evaluating CRA performance, the Board of Governors of the Federal Reserve System, the Office of the Comptroller, and the Federal Deposit Insurance Corporation (agencies) will take into account the unique circumstances affecting borrowers and banks resulting from the COVID-19 emergency and will not penalize a bank for making a large volume of loans for which gross annual revenue information is not available. The agencies will also take into account a bank’s good faith efforts demonstrably designed to support low- and moderate-income individuals and small businesses and small farms and its efforts to comply with applicable consumer protection laws.

Thank you Len S.

In 2020, we reported "revenues unknown" (code 3) for all PPP loans in our small business/small farm data. During the forgiveness process, GARs are being collected on some of these borrowers, since it is optional on the application. For example, PPP loan was originated in the first round in 2020 without GAR. Borrower applies for forgiveness in 2021 and includes GAR. Do we go back to the original loan, enter the GAR and re-report? Sounds messy and I'm confused as to how this will benefit us.

The purpose of collecting the GAR is so that examiners can determine how my of your small business loans really were extended to truly small businesses. This information is used in the "borrower characteristics" test during CRA exams and is an important factor in your CRA rating performance. So doing some remedial work is worth the effort IMO. You just need to show some documentation to support the number you report. I don't mean an audited financial statement. But you do need something from the borrower representing the GAR for the business. Typically 50% to 70% of small business loans are extended to businesses with GAR <= $1 mllion. This is the parameter that is one of the 2020 OCC's "comparators" (65% of market avg. penetration rate). If you don't collect the data your penetration rate will drop precipitously; I am certain examiners will take that into consideration for the PPP loans (make sure you segregate them),. but I would rather look like a hero with high penetration rates rather than someone beneath water having to explain how the PPP's adversely affected your penetration rate.

Thanks so much for the explanation as to how this will benefit us.

I'm just not sure where it ends. 2020 PPP borrowers are applying for forgiveness practically every day. If we obtain the GAR in 2021 for a loan originated in 2020, do we re-submit our 2020 data at some point? Also, we are not collecting GAR for every PPP loan. Some will be reported with code 1 or 2, while others will remain a code 3. Is that acceptable?

You could resubmit your 2020 CRA file with the GAR information added. It's probably too late to change what will be reported when the data is released later this year - although the Board has been so late releasing the annual data the week before Christmas in 2019 and 2020 -so maybe your updated GAR data will be in the national file when it is released and those banks that collected the information will look really good in comparison to those that didn't.

We encourage all our clients to collect and report the GAR for every PPP loan. It is important for the "Borrower Characteristics" test and needed for any loans that you want to be recognized as community development under the economic development definition.

Matching the GAR and employee count to the SBA Part 121 size standards can be time-consuming. So we developed a program to match records against the SBA size standards with files that have the borrower's NAICS codes (it's on the SBA application) in order to help our clients