A business customer has a credit card with a $10,000 line which was reported on the bank's CRA LAR in the year it was opened - 2014.

The following year - 2015 the customer asks for a $10,000 increase in the line, therefore a total line of $20,000. What amount should be reported on the CRA LAR in 2015? The $10,000 increase or the $20,000 total line?

I've looked at the Q and A and think this is applicable, however I want to be sure. There is no subsequently issued card, just an increase in the line.

SECTION __.42(a)(2) � 3: How should an institution collect data pertaining to credit cards issued to small businesses?

A3. If an institution agrees to issue credit cards to a business�s employees, all of the credit card lines opened on a particular date for that single business should be reported as one small business loan origination rather than reporting each individual credit card line, assuming the criteria in the �small business loan� definition in the regulation are met. The credit card program�s �amount at origination� is the sum of all of the employee/ business credit cards� credit limits opened on a particular date. If subsequently issued credit cards increase the small business credit line, the added amount is reported as a new origination.

Thanks.

You should follow the instructions for reporting "renewals" in the Q and A at 42(a)-5. It also applies to lines of credit and the cards are treated as line of credit.

(If you did not extend the maturity, just report the new money.)

If I am understanding this correctly, in 2015 when the line was increased to $20,000, we would report $20,000?

No, unless you did a new "line" that replaced the old line and extended the maturity, just report the new funds, the new $10,000.

The instructions at 42(a)-5 apply to all renewals/new money situations, including cards.

Thanks Kathleen. Maybe I am having problems grasping that a credit card would have a maturity date.

Well, they usually have "expiration dates", don't they? If yours do not (if they are done line a demand line of credit with no expiration), then just report the new money because you are not extending anything, creating a new "note".

Thanks as always!

I would like to bring this thread back to life and ask a couple questions regarding temporary increases to business credit cards.

A customers requests to increase a business credit card from $5,000 to $10,000 for ten days. After the ten days has elapsed, the credit limit will reduce back to $5,000.

Is an increase and increase regardless of it being temporary? Some credit card limits are temporarily increased several times a year. Do we report each temporary increase as an origination? Increases, regardless if they are temporary, must be approved in some form or fashion.

bump

The interagency Q and A and the reg do not address temporary increases. You can report one refinance/increase a year. You would not be reporting balances as they go up and down. Take a look at this info from the Q and A.

Schedule RC–C, Part I.

§ ll.42(a)—5: Should institutions
collect and report data about small
business and small farm loans that are
refinanced or renewed?

A5. An institution should collect
information about small business and
small farm loans that it refinances or
renews as loan originations. (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. However, for
purposes of small business and small
farm CRA data collection and reporting,
it is not necessary to distinguish
between the two.) When reporting small
business and small farm data, however,
an institution may only report one
origination (including a renewal or
refinancing treated as an origination)
per loan per year, unless an increase in
the loan amount is granted. However, a
demand loan that is merely reviewed
annually is not reported as a renewal
because the term of the loan has not
been extended.

If an institution increases the amount
of a small business or small farm loan
when it extends the term of the loan, it
should always report the amount of the
increase as a small business or small
farm loan origination. The institution
should report only the amount of the
increase if the original or remaining
amount of the loan has already been
reported one time that year. 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. These two
originations may be reported together as
a single origination of $20,000.

Thank you Kathleen for the response. I am confused by the section in that Q&A that says:

"When reporting small business and small farm data, however, an institution may only report one origination (including a renewal or refinancing treated as an origination) per loan per year, UNLESS an increase in the loan amount is granted."

Leads me to believe any number of increases can be reported.

Another question I have in regards to this same topic is with the statement in the Getting it Right relating to credit cards that says:

"The credit card program’s “amount at origination” is the sum of all of the employee/business credit cards’ credit limits opened on a particular date. If subsequently issued credit cards increase the small business credit line, the added amount is reported as a new origination."

In the cases where we increase a credit limit we may or may not issue another credit card but simply increase the limit overall.

Correct - Any number of increases can be reported.

It does not matter whether another card is issued at the time the credit limit is increased, report just the increase.