This episode will lay the foundation for community development loans as it relates to your CRA program.

Community development loans must have a primary purpose of community development. You will need to follow the loan proceeds to the intended primary impact that resulted from originating a loan to the borrower.

An “oldie but goodie” resource is the Office of the Comptroller of the Currency’s Community Developments Fact Sheet published by the Community Affairs team.

Within this resource, the primary purpose of community development is defined as follows:

Under the CRA, community development activities

• Support affordable housing for low- or moderate-income (LMI) individuals, including multifamily rental housing.
• Target community services to LMI individuals.
• Promote economic development by financing businesses or farms that have gross annual revenues of $1 million or less or that meet the size eligibility requirements of the U.S. Small Business Administration’s (SBA) Small Business Development Company or Small Business Investment Company (SBIC) programs.
• Revitalize or stabilize LMI geographies; designated disaster areas; or distressed or underserved nonmetropolitan middle-income geographies designated by the OCC, the Board of Governors of the Federal Reserve System, and the Federal Deposit Insurance Corporation. [Source OCC publication linked above]

This guide from the Federal Reserve Bank of Dallas is an excellent resource and one I still use several times a month.

This publication is intended as a quick guide for identifying CRA loan data reporting categories. It is designed for bank CEOs, presidents, CRA and compliance officers, and others who have an interest in the CRA loan data collection process. Refer to Regulation BB, Regulation C, and the instructions for the preparation of the Consolidated Reports of Condition and Income for more detailed information.

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Linda Ezuka, LinkedIn https://www.linkedin.com/in/linda-ezuka-cra-today/

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