Wis. Admin. Code Department of Financial Institutions DFI-CU 72.06

Current through October 28, 2024

Section DFI-CU 72.06 - Member business loan policy requirements

A credit union's member business loan policy shall include all of the following:

(1) The types of business loans the credit union will make.

(2) The credit union's trade area.

(3) The maximum amount of the credit union's assets, in relation to net worth, that it will invest in member business loans.

(4) The maximum amount of the credit union's assets, in relation to net worth, that it will invest in a given type of business loan.

(5) The maximum amount of the credit union's assets, in relation to net worth, that it will loan to a member or associated members, subject to s. DFI-CU 72.08.

(6) The qualifications and experience of personnel involved in making and administering business loans.

(7) A requirement for analysis and documentation of the ability of the borrower to repay the loan.

(8) A requirement for the receipt and periodic updating of financial statements and other documentation, including tax returns.

(9) A requirement for documentation sufficient to support each request to extend credit, or increase an existing loan or line of credit, except where the board of directors finds that the required documentation is not generally available for a particular type of loan and states the reasons for those findings in the credit union's written policies. The documentation shall include all of the following:

(a) Balance sheet.

(b) Cash flow analysis.

(c) Income statement.

(d) Tax data.

(e) Analysis of leveraging.

(f) Comparison with industry average or similar analysis.

(10) Collateral requirements, including all of the following:

(a) Loan-to-value ratios.

(b) Determination of value.

(c) Determination of ownership.

(d) Steps to secure various types of collateral.

(e) A schedule as to how often the credit union will reevaluate the value and marketability of collateral.

(11) The interest rates and maturities of the business loans.

(12) General loan procedures, including all of the following:

(a) Loan monitoring.

(b) Servicing and follow-up.

(c) Collection.

(13) Identification of those individuals prohibited from receiving member business loans.

(14) Guidelines for purchase and sale of member business loans and loan participations, if the credit union intends to engage in these activities.

Wis. Admin. Code Department of Financial Institutions DFI-CU 72.06

CR 02-034: CR Register August 2002 No. 560, eff. 9-1-02.

The Office of Credit Unions recognizes that all of the provisions of the policy may not apply to every loan.