§__.42(a) Gross Annual Revenue Versus Adjusted Gross Annual Revenue

§__.42(a)(4) – 4

Q: When indicating the gross annual revenue of small business or small farm borrowers, do institution rely on the gross annual revenue or the adjusted gross annual renew of their borrowers?

A4. Institutions rely on the gross annual revenue, rather than the adjusted gross annual revenue, of their small business or small farm borrowers when indicating the revenue of small business or small farm borrowers. The purpose of this data collection is to enable examiners and the public to judge whether the institution is lending to small businesses and small farms or whether it is only making small loans to larger businesses and farms.

The regulation does not require institutions to request or consider revenue information when making a loan; however, if institutions do gather this information from their borrowers, the Agencies expect them to collect and rely upon the borrowers’ gross annual revenue for purposes of CRA. The CRA regulations similarly do not require institutions to verify revenue amounts; thus, institutions may rely on the gross annual revenue amount provided by borrowers in the ordinary course of business. If an institution does not collect gross annual revenue information for its small business and small farm borrowers, the institution should enter the code “revenues not known.” See Q&A §__.42(a)(4) – 2.

 

Source: Interagency Questions & Answers Regarding Community Reinvestment | July 2016

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