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#2265461 - 01/28/22 10:28 PM Extensions- What loan amount to use?
BB Offline
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Joined: Jun 2018
Posts: 8
If the loan maturity date was extended for 60,90, or even 120 days via a change & terms agreement. Would we report the original loan amount or use a balance amount? The change & terms does not say hereby reduced to... This is the first extension for this loan from the maturity date.

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#2265464 - 01/28/22 10:55 PM Re: Extensions- What loan amount to use? BB
Len S Offline
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Joined: Oct 2004
Posts: 1,945
Connecticut
First, you report renewals or refinancings subject to a once-per-year limit. So if you originated the loan in Sept 2021 and renew it in December 2021 and then again in March 2022, you would report it only once for 2021 and you could report it again for the amount of the renewal or refinance during 2022.
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#2265488 - 01/31/22 03:11 PM Re: Extensions- What loan amount to use? BB
BB Offline
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Joined: Jun 2018
Posts: 8
correct. I'm just stuck on which amount to use since the extension document did not say the balance amount however the bankers report has the balance amount. The loan originated years ago and they are extending it for the first time at maturity now.

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#2265871 - 02/04/22 10:02 PM Re: Extensions- What loan amount to use? BB
BB Offline
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Joined: Jun 2018
Posts: 8
Can anyone else clarify? When the bank extends a loans maturity does the bank report the original note amount or the current balance at the time the extension is approved?

Ex: Loan originated 5 years ago for $150k and matures this year. Bank does an extension for 3 months this year while waiting for financials to do a renewal. What amount is reported for the extension?

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#2265880 - 02/04/22 10:25 PM Re: Extensions- What loan amount to use? BB
rlcarey Online
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rlcarey
Joined: Jul 2001
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Galveston, TX
This covers an increase, however the process is the same without an increase.

For example, a financial institution makes a term loan for $25,000; principal payments have resulted in a present outstanding balance of $15,000. In the next year, the customer requests an additional $5,000, which is approved, and a new note is written for $20,000. In this example, the institution should report both the $5,000 increase and the renewal or refinancing of the $15,000 as originations for that year.

However, the institution may report the $5,000 increase together with the renewal or refinancing of the $15,000 as a single origination of $20,000.
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#2265923 - 02/07/22 04:53 PM Re: Extensions- What loan amount to use? BB
BB Offline
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Joined: Jun 2018
Posts: 8
I am aware of this but this doesn't cover my question. A new note (renewal) was not written yet and a true renewal was not done in my scenario. The loan simply matures this year and is extended a few additional months in order to get ready for a renewal at which time they may do for the balance left. What loan amount is reported for the Extension only? The original amount from when it originated years ago or the balance currently?

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#2265925 - 02/07/22 05:13 PM Re: Extensions- What loan amount to use? BB
rlcarey Online
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rlcarey
Joined: Jul 2001
Posts: 79,294
Galveston, TX
Renewal/Extension - it means the same thing. It does not really mean a specific period of time.

Refer to the FAQs:https://www.govinfo.gov/content/pkg/FR-2016-07-25/pdf/2016-16693.pdf

A refinancing generally occurs when the existing loan obligation or note is satisfied and a new note is written, while a renewal refers to an extension of the term of a loan.
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#2266928 - 02/25/22 09:46 PM Re: Extensions- What loan amount to use? BB
Care4RCommunity Offline
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Care4RCommunity
Joined: Apr 2012
Posts: 102
NJ
I don't think that renewal and extension means the same thing at every bank. No credit decision is made with our extensions - just a courtesy because we are waiting for documentation before we disburse the loan. Usually pertains to an extension of the commitment to lend - not an extension of credit.

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#2271108 - 06/01/22 09:50 PM Re: Extensions- What loan amount to use? BB
Sheryl R Offline
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Sheryl R
Joined: Mar 2001
Posts: 290
Cedar Rapids, IA,
If there are 2 renewals/extensions in the same year, the 1st one is a 3 month extension to allow time for the borrower to provide financials. Because we do not have financials, we would enter 3 Not Known in GAR and it would not be included in small business ratios. The 2nd renewal is to extend the loan 3 months later; after the LO reviews the financials and the maturity is extended 12 months.

Our practice is to record the 1st renewal on the LAR but I've got someone asking me if we can record the 2nd one due to the fact that we can record GAR as 1 or 2 and have it included in SMB analyses.

Does it matter which one we record on our LAR? I feel like the FAQs don't really address this scenario.
Thanks in advance!

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#2271165 - 06/03/22 03:00 AM Re: Extensions- What loan amount to use? BB
Len S Offline
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Joined: Oct 2004
Posts: 1,945
Connecticut
The regulators prefer you report the GAR, so it's better to report the second renewal with the GAR and omit the first. It doesn't inflate your lending because you are reporting the renewal only once. It would be tricky if you change the amount of the loan when you renew it the second time, but I would still recommend that you report the second renewal when you have the GAR.
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