Can someone direct me, either in the CRA Reg or the reporting guidelines, to an answer. On a Small Business loan, if there are no actual revenues involved only individual income, for say an individual getting a SBL or a sole proprietor, is the income of that person or guarantor reported as < or > $1mm, or is it a "3" revenues not known?
I need a response for a system upgrade and need to be able to reference the reg.

This seems to be the question that we all struggle with. I wish the regulators would issue some guidance regarding this issue. I think we are all doing different things. That makes the data unreliable in my opinion.

It is covered in the reg. If you didn't rely on REVENUES for repayment, you report the code as a 3, "revenues unknown or not used in the credit decision". You never use income as a factor in determining revenue codes.

If you overuse this code you can get yourself into trouble. Be sure to document any particular products that use it on a more often than not basis (i.e. a LOC approved by individuals credit scores).

Is it actually stated somewhere in the Reg that you cannot use income, as opposed to revenues? I understand that is the reporting requirement, but how do I prove it with documentation to the non-believers?

I would also like to see the exact reference where it says you can not use income as part of the revenues you report for CRA. I have many commercial loan naysayers as well, and would like to have a cite to show them or read from.

And if we're supposed to report the revenues used in the credit decision, what do we do when a lender uses both the individual's and gross revenues from the business venture for consideration of repayment? This happens most often for individuals borrowing for business credit.

Signed,
Confused in Compliance

There are a couple of factors IMO that should be added to the Revenue/Income debate. First look at the purpose of why this data is being collected. Ask your examiner for their explanation.

IMO its to determine if the business falls into $1,000,000 or less catagory, as there are analysis reports that break out Small Business loans by under and over 1 Mil in "Gross Annual Revenue". If you use revenue and income to qualify the loan and the combined amount is 1 Mil or less, it isn't going to matter if you use Income, Revenue or combine them, as you are still going to report a CRA Revenue code of 1. So, if you report a code 1 how can examiners ding you, if the code reported is correct?

You are reporting a code that covers a very broad Income/Revenue range and not a dollar amount. For credit qualification you can use any combination of income and revenue. For CRA reporting purposes I would use the annual revenue of the business, as that appears to be a detreminate factor for analysis, and the governments statistical purposes.