Member Business Loan Policies and Procedures
(1)Types of business loans to be made;
(2)Identification of trade area to be served;
(3)The maximum amount of credit union assets, relative to net worth, that will be invested in member business loans;
(4)The maximum amount of credit union assets, relative to net worth, that will be invested in a given category or type of member business loan;
(5)The maximum amount of credit union assets, relative to net worth, that will be loaned to any one member or group of associated members, subject to 441-720-0330 (Aggregate Loans to a Member or Associated Members);
(6)The qualifications and experience (minimum of 2 years experience) of personnel involved in making and administering business loans;
(7)Initial and ongoing analysis and documentation of the ability of the borrower to repay the loan;
(8)Receipt and periodic updating of financial statements and other documents, including tax returns;
(9)Documentation sufficient to support each request for an extension of credit, or an increase in 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 must include the following:
(a)Balance sheet, income statement and tax returns;
(b)Cash flow analysis, history of borrower and business, and analysis of leveraging;
(c)Comparison with industry average or similar analysis;
(10)Collateral requirements must include all of the following:
(b)Determination of value;
(c)Determination of ownership;
(d)Steps to be taken to secure various types of collateral;
(e)Frequency of reevaluation of the value and marketability of the collateral; and
(f)Insurance, if applicable.
(11)Interest rates and maturities of business loans;
(12)General loan procedures which include:
(a)Loan monitoring; including loan review and grading system;
(b)Servicing and follow-up;
(d)Loan officer limits; and
(e)Borrower Documentation; such as loan agreement, note, security agreement, borrowing authority, and commitment letter.
(13)Identification of individuals prohibited from receiving member business loans.
(14)Procedures for adequate safeguards to minimize potential environmental liability.
Rule 441-720-0315 — Member Business Loan Policies and Procedures,