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CRA Definition for Commercial/Industrial Purpose

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Under CRA, what constitutes a commercial or Industrial purpose? I have looked for a definition to no avail. Would this include a loan to a small business for a capital injection?

Small Business and Small Farm loans for CRA follow call report definitions. The instructions for Schedule RC-C1, Loans and Leases, contain the needed information. Commercial and Industrial loans are those in Item 4 on this schedule.

The instructions for Schedule RC-C1 are here.Be sure to review this section for the lengthy list of inclusions and exclusions which accompanies the definition below.

The bank should already be classifying loans for its Call Report. If done accurately, the loans secured by non-farm non-residential real estate and the commercial and industrial loans that are for $1 million and less and originated/renewed/renewed and not HMDA reportable will be your small business loans.

"Commercial and industrial loans. Report loans for commercial and industrial purposes to sole proprietorships, partnerships, corporations, and other business enterprises, whether secured (other than those that meet the definition of a “loan secured by real estate”) or unsecured, single-payment or installment. On the FFIEC 041, all banks should report the total of these loans in column B, and banks with $300 million or more in total assets should also report in the appropriate subitems of column A a breakdown of these loans between those loans to U.S. and non-U.S. addressees. On the FFIEC 031, all banks should report a breakdown of these loans between those to U.S. and non-U.S. addressees for the fully consolidated bank in the appropriate subitems of column A and for domestic offices in the appropriate subitems of column B.

Commercial and industrial loans may take the form of direct or purchased loans. Include loans to individuals for commercial, industrial, and professional purposes but not for investment or personal expenditure purposes. Also include the reporting bank's own acceptances that it holds in its portfolio when the account party is a commercial or industrial enterprise. Exclude all commercial and industrial loans held for trading."

First published on 3/25/13

First published on 03/25/2013

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