What must your member business loan policy address?
At a minimum, your policy must address the following:
(a) The types of business loans you will make;
(b) Your trade area;
(c) The maximum amount of your assets, in relation to net worth, that you will invest in secured and unsecured business loans;
(d) The maximum amount of your assets, in relation to net worth, that you will invest in a given category or type of business loan;
(e) The maximum amount of your assets, in relation to net worth, that you will loan to any one member or group of associated members, subject to § 723.7(c)(2) and § 723.8 ;
(f) The qualifications and experience of personnel (minimum of 2 years) involved in making and administering business loans;
(g) A requirement to analyze and document the ability of the borrower to repay the loan consistent with appropriate underwriting and due diligence standards, which also addresses the need for periodic financial statements, credit reports, and other data when necessary to analyze future loans and lines of credit, such as, borrower's history and experience, balance sheet, cash flow analysis, income statements, tax data, environmental impact assessment, and comparison with industry averages, depending upon the loan purpose;
(h) The collateral requirements must include:
(1) Loan-to-value ratios;
(2) Determination of value;
(3) Determination of ownership;
(4) Steps to secure various types of collateral; and
(5) How often the credit union will reevaluate the value and marketability of collateral;
(i) The interest rates and maturities of business loans;
(j) General loan procedures which include:
(1) Loan monitoring;
(2) Servicing and follow-up; and
(k) Identification of those individuals prohibited from receiving member business loans.
[64 FR 28729, May 27, 1999, as amended at 68 FR 56551, Oct. 1, 2003]
Title 12 published on 2012-01-01
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