Q: Are small business loans secured by business assets and a personal residence taken as an abundance of caution reportable?
This issue is addressed in Q&A ___.12(v)-3 (page 11653 of the Federal Register notice
). For Call Report filers, loans secured by nonfarm residential real estate that are used to finance small businesses are generally not included as “small business” loans unless the security interest in the nonfarm residential real estate is taken only out of an abundance of caution. (See Call Report glossary definition of Loans Secured by Real Estate.) The Q&A also highlights the potential consideration of these transactions as community development loans if they promote community development.
Similarly, institutions that file TFRs may report certain nonfarm residential real estate depending on how the loan is classified for TFR purposes. Loans secured by nonfarm residential real estate to finance small businesses may be included as small business loans only if they are reported on the TFR as nonmortgage commercial loans. (See TFR Q&A No. 62.