Community Investment: Loan
Qualifications
A commercial loan would be
eligible if it is located in a
target area. There are several
targeted areas, but the one most
commonly used is targeted by income.
For a rural area, a commercial loan
would be eligible if the project was
located in a census tract with
income at or below 115% of the
median income for the area. For an
urban area, a commercial loan would
be qualified if the project was
located in a census tract with
income at or below 100% of the
median income for the area. To
determine the income for a census
tract, members can utilize the Geocoding/Mapping
System on the
FFIEC website.
Commercial loans in rural areas
are eligible for a
Rural
Capital Advance. The Bank defines a rural area as
a unit of general local government
with a population of 25,000 or less;
an unincorporated area outside a
Metropolitan Statistical Area (MSA),
or an unincorporated area within a
MSA that is eligible for housing or
economic development assistance from
the USDA. To determine whether or
not an address is considered rural,
members can use the Geocoding/Mapping
System for Business Programs on the Property Eligibility
link on the
USDA website.
Other targeted areas include:
- Federal Champion Community
as designated by the Secretary
of HUD or Secretary of the USDA
- Federal Enterprise Community
as designated by the Secretary
of HUD or Secretary of the USDA
- Federal Empowerment Zone as
designated by the Secretary of
HUD or Secretary of the USDA
- Indian Area as designated by
the Native American Housing
Assistance and
Self-Determination Act
There are other methods of
qualifying a project. Other projects
that would qualify include:
- A loan to a business that
meets one of the Small Business
Administration's definitions of
small business. Generally, this
is a business with revenue under
$750,000 per year; however, many
businesses have higher limits,
or are qualified based on the
number of employees. You can
visit the U.S. Small Business
Administration’s
website to
determine if a business
qualifies.
- A loan to a business that
provides employment to low and
moderate income persons. A
business would need to
demonstrate that at least 51% of
its employees were at or below
115% of area median income if
located in a rural area, and at
or below 100% of median income
if located in an urban area.
(see
HUD income guidelines)
- A loan to a business in a
federal disaster area. These
loans would need to be
associated with expenses
incurred as a direct result of
the disaster.
