Can anyone explain to me what this means?

"Activities that promote economic development by financing businesses or farms that meet the size eligibility standard of the SBA small business development or small business investment company programs or have gross annual revenues of $1 million or less."

This is one of the definitions of community development but I am confused because if it is a small business loan it cannot be community development.

No one that I have talked to has any idea what this is

The SBA definition of small business includes analysis of how many employees a company has (this is the size eligibility); so that is one threshold and then another way of defining small business is any loan less than $1 million. So you can have loans to companies meeting either of these definitions that won't be small business, so you determine if they are CD.

Hope I haven't confused you, if so ask another question.

Dear "BS",

You have stumbled on one of the most confusing and least understood elements of Community Development. I will do my best to explain succintly. There are two important parts of the sentence. First is the phrase "promote economic development. Second is the phrase "financing small businesses". "Economic development" in CRA parlance as it pertains to this type of community development activity means supporting permanent job creation, retention or improvement for low or moderate income people and/or in low or moderate income areas or in areas targeted by Federal, state, local or tribal government for economic development. Jobs are a necessary quality of any potential community development loan that meets this definition of economic development. The second part involves "financing small businesses". In other words, the borrower must be a small business or someone who is financing small businesses. There is a size standard applied as explained in the rest of the sentence. One of the problems is that you may have a loan situation that meets the foregoing definition but which cannot be reported as community development because it is a reportable small business loan and under the Regulation there is a priority for reporting that stipulates reportable small business loans trump reportable community development loans.

OK, I think I got it.

For example, a loan to a small business in an amount over $1 million, the loan will help to create or retain jobs.

Or how about:

A construction loan to a small business to open a new site in an enterprise zone and bringing new jobs to the area?

BS
Sounds like you are on the right track. However, make certain too that the primary purpose of the loan is the community development purpose. In other words be sure the creation of the jobs is not incidental to the accommodation, but an important consideration. Anything that can document that, such as a letter from the local economic development agency stating the loan was critical to getting a new business to move into or an existing business to stay in a targeted area, is important.

I will keep that in mind. Thanks Len!