My bank will be reporting small business lending data under the Equal Credit Opportunity Act (as required by the §1071 rule) and is trying to determine which tier the bank falls under for data collection and reporting purposes. However, the bank has not routinely collected gross annual revenue (GAR) from its small business borrowers to be able to determine whether the bank meets the threshold for reporting of 100 originated covered credit transactions in each of the two preceding calendar years.
Q Is there a suggested method for determining the GAR for 2022 and 2023?
AThe bank may use “any reasonable method to estimate its originations to small businesses for either or both of the calendar years 2022 and 2023″ which could include any of the following options.
The bank may:
- Ask every applicant of a covered credit transaction approved between October 1 through December 31, 2023 to self-report whether its GAR for the preceding fiscal year was $5 million or less;
- Assume that every covered credit transaction it originates for business customers in calendar years 2022 and/or 2023 is extended to a small business;
- Annualize the number of its covered credit transactions from October 1 through December 31, 2023 by quadrupling the originations for this period and apply the annualized number of covered originations to both calendar years 2022 and 2023 or to either 2022 or 2023.
See comment 5 to §1002.114(c) and the Consumer Financial Protection Bureau’s small business lending rule FAQs – Institutional coverage FAQ #14.
For more information, contact ABA’s Rhonda Castaneda.
Please note that this section is not a substitute for professional legal advice.