The current version modified the position, apparently by precluding the reporting of renewals, and only permitting the reporting of refinancings, where an obligation is satisfied and replaced by a new obligation by the same borrower. The review may include factors such as payment and overdraft history and credit bureau information. On larger lines it may include the submission of new financials. The customer is then notified if the line is renewed. Whether an obligation is renewed or refinanced is of little substantive importance, and the distinction is artificial in the small business and small farm lending context.
Renewals are simply more cost-effective ways to accomplish the same objective.
In the small business context, there is no need to extinguish the obligation and replace it with a new obligation, and the failure to recognize this could have unintended negative consequences. The costs of the additional meaningless steps would be borne by the customer. However, the failure to report both renewals and refinancings of small business and small farm loans would seriously understate the extent of small business borrowing in America. Public CRA data is often used to make and influence public policy. Indeed, the reason financial institutions are required to report small business loans is partly the perception by some that banks were not doing enough in this area.