Posted By: clarkgriswald
CRA Revenues- Individual Borrowers - 07/12/16 05:57 PM
I'm the new CRA Officer for the Bank and I've been reading the FAQ's and other sources, but I continue to receive questions regarding how to report Gross Revenue so wanted to see if I'm on the right track.
I understand that the purpose of documenting gross revenues/sales (not income!) for CRA is for examiners and the public to determine the size of the business we are doing business with. That being said I want to lay out a couple of scenarios and see what others think.
1). Loan is being made to a physician for the purpose of investing in a medical company. At the time of buy-in the physician will not have earnings from the medical company that he/she is buying into. The physician is underwritten based on personal financial information and the financial statement of the income generating business they are buying into. What should we use as Revenue Source? My thought is to use the revenue from the medical company that the doctor is buying into. Would the analysis change if the doctor already had existing shares of the company and was purchasing more shares? I say no.
2). Loan made to an individual who is a partner in a business. That individual will own 10% of the business. The revenue of the business for 2015 was $10 million. Should the revenue be prorated (10% of his portion is $1 million) for gross revenue? I say no I think the proper number to use is the $10 million.
Any feedback is much appreciated.
I understand that the purpose of documenting gross revenues/sales (not income!) for CRA is for examiners and the public to determine the size of the business we are doing business with. That being said I want to lay out a couple of scenarios and see what others think.
1). Loan is being made to a physician for the purpose of investing in a medical company. At the time of buy-in the physician will not have earnings from the medical company that he/she is buying into. The physician is underwritten based on personal financial information and the financial statement of the income generating business they are buying into. What should we use as Revenue Source? My thought is to use the revenue from the medical company that the doctor is buying into. Would the analysis change if the doctor already had existing shares of the company and was purchasing more shares? I say no.
2). Loan made to an individual who is a partner in a business. That individual will own 10% of the business. The revenue of the business for 2015 was $10 million. Should the revenue be prorated (10% of his portion is $1 million) for gross revenue? I say no I think the proper number to use is the $10 million.
Any feedback is much appreciated.