Ncua Commercial Lending Regs

Question 1

How does the NCUA Part 723 define commercial loan

Answer 1

any loan, line of credit, or letter of credit used for commercial, industrial, agricultural or professional purpose

Question 2

Is there a requirement for credit unions to have a commercial lending policy if they offer member business loans?

Answer 2

Yes- the board of directors must adopt a commercial loan policy and must review that policy annually

Question 3

Ncua sets limits for the total amount of outstanding commercial loans to anyone member or group of associated members. What are those limits?

Answer 3

15% of the credit unions net worth or
$100,000 and additional 10% of the credit unions net worth can be issued if the amount above the 15% is secured by readily marketable collateral

Question 4

Ncua sets lending limits for 2 different categories when it comes to commercial loans. What are those categories

Answer 4

Credit Union must maintain a limit which is lesser of 1.75 times the actual net worth of the credit Union
Or 1.75 times the minimum net worth required under FCU act for a credit Union to be well capitalized