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#2041164 - 09/29/15 02:35 PM
Business Credit Cards - How to report increase?
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Platinum Poster
Joined: Jan 2004
Posts: 778
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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.
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#2115339 - 01/24/17 06:40 PM
Re: Business Credit Cards - How to report increase?
Tennismom
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Member
Joined: Nov 2013
Posts: 54
USA
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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.
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#2115615 - 01/26/17 02:16 PM
Re: Business Credit Cards - How to report increase?
Tennismom
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Posts: 54
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#2116276 - 01/31/17 06:07 PM
Re: Business Credit Cards - How to report increase?
Tennismom
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10K Club
Joined: Dec 2000
Posts: 21,293
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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.
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#2116701 - 02/02/17 04:04 PM
Re: Business Credit Cards - How to report increase?
Tennismom
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Member
Joined: Nov 2013
Posts: 54
USA
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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.
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