FAQs for Section 76.16 Data Collection and Reporting Regulation

A: The New York State Legislature has amended the state Community Reinvestment Act (CRA), Section 28-b of the New York Banking Law, to require the Department of Financial Services to evaluate how well banks are serving the credit needs of minority- and women-owned businesses (MWOBs) and their technical assistance programs for MWOBs. MWOBs are businesses that are more than half owned by minorities or women.

To implement this law, the Department issued regulation, 3 NYCRR § 76.16 (Section 76.16), which will require state-chartered banking institutions to collect and report data obtained from all business loan applicants to allow the Department to conduct the analyses required by law.

A: State-chartered banking institutions currently subject to CRA evaluations by the Department.

A: August 8, 2023.

A: Banks must collect information from all businesses who apply for loans or other credit, not just MWOBs. Specifically, Section 76.16 requires collecting data on any application for credit by a business to a banking institution which has originated at least 25 credit transactions for businesses in their New York State assessment area(s) in each of the two preceding calendar years. (See 3 NYCRR § 76.16(b).)

A: Data should be collected and reported for all applications for credit, regardless of whether the application results in an origination, denial, or other outcome.

A: The Department uses the phrasing “minority- and women-owned businesses” (MWOBs) to draw a distinction from the more commonly used “minority- and women-owned business enterprises” (MWBEs). State law already addresses MWBEs, whose minority- or women-owned status has been certified for the purposes of state contract eligibility. Designated MWBEs comprise a significantly smaller group than the overall group of businesses owned by minorities and/or women who should be considered for CRA purposes, so the regulation uses that broader term.

A: The threshold of 25 refers to the aggregate of loans and other credit transactions made to businesses within the bank’s assessment area(s) in New York State.

A: Yes. Section 76.16 itself includes, as an appendix, a form that banks can request their business loan applicants complete to comply with the bank’s Section 76.16 requirements. That form is also available below. Banks have the option of collecting the required information from applicants in a different format or method and may contact the Department to discuss.

• Appendix A to Part 76 - Sample form for collecting certain applicant-provided data under section 76.16 (MS Word)

A: Yes. The Department has sent to all CRA Officers at New York State-chartered banking institutions a template that banks may use to comply with the Department's information requests in CRA evaluations related to Section 76.16. That template is also available below. Banks have the option of submitting the required information to the Department in a different format or method and may contact the Department to discuss.

• Sample data submission template for applicant-provided data under section 76.16 (MS Excel)

A: Only when requested by the Department, generally as part of the bank’s regularly scheduled CRA evaluation.

A: Banking institutions should request information required by Section 76.16 from a business loan applicant at or around the time the business makes the application.

A: Yes. Because the data collection under Section 76.16 is made primarily for a bank’s CRA evaluation, Section 76.16 only requires the collection of data for credit applications in a covered banking institution’s CRA assessment area(s), based on the location of the loan.

A: Yes. For reference, Section 76.2(p)(3) provides that a loan “is located in the geography where the main business facility . . . is located or where the loan proceeds otherwise will be applied, as indicated by the borrower.” Thus, in the absence of other information indicating where a loan will be used, a banking institution should consider the applicant’s main business facility as the loan location. Section 76.16 data should not be collected in the absence of a good-faith belief in a connection between the loan application and the bank’s CRA assessment area.

A: No. The Department is considering whether to treat compliance with the Section 1071 Regulation, either as written or in a modified form, as compliance with Section 76.16 after the Section 1071 Regulation takes effect.

A: Covered banking institutions are responsible for determining their own regulatory obligations. Nonetheless, the Department notes that some of the most significant differences between the two regulations include:

• Section 76.16 applies only to New York State-chartered banking institutions subject to the state CRA who have originated at least 25 business loans (or other extensions of credit) in their CRA assessment area(s) in each of the past two years. The Section 1071 Regulation applies nationally and sets its own lending volume threshold.
• Section 76.16 requires data collection regarding all business loan applicants, regardless of size of the business. The Section 1071 Regulation requires data collection only from small business loan applicants, as defined by that regulation.
• Section 76.16 requires data collection regarding business loan applicants in the banking institution’s CRA assessment area. The Section 1071 Regulation requires data collection for small business loan applicants throughout the United States.
• The Section 1071 Regulation requires the collection of information regarding the sex of principal owners and the LGBTQI+-owned status of small business loan applicants. Section 76.16 does not require this information for any loan applicants and does not authorize institutions to request this information from non-small business loan applicants, even after both regulations take effect.
• Data collected pursuant to Section 76.16 will only need to be submitted to the Department upon request, as part of a CRA evaluation or otherwise, whereas the 1071 Regulation sets an annual reporting schedule.

A: Yes. There is no limitation on the business size for Section 76.16 data collection and reporting.

A: Yes. There is no limitation on the size of the loan for Section 76.16 data collection and reporting.

A: No. Because Section 28-b of the Banking Law (the New York State CRA) refers to “small businesses” and “small farms” as separate concepts, the Department has concluded that the Legislature did not intend to treat farms as businesses for CRA purposes.

A: No. Because many of these entities lack an ownership structure, they are not appropriate for an analysis of lending to minority- and women-owned businesses.

A: No. Data on applications from publicly traded companies is not required.

A: Personal loans going through a corporate entity (such as a trust or LLC) do not constitute business loans and should not be reported.

A: If a natural person applies for a loan intending to use the proceeds for business purposes, as opposed to personal, family or household purposes, such applicant is considered a “business” for purposes of Section 76.16.

A: Appendix A to Section 76.16 states that “a principal owner is any natural person who owns 25 percent or more of the equity interest of a business.” If no natural persons own 25 percent or more of the equity interest in a business loan applicant, then the business should be marked as neither a minority- nor women-owned business, and no information should be entered for the business loan applicant’s principal owners.

A: Section 76.16(f)(6) requires that, “[i]n the event of a single application from multiple entities operating pursuant to a joint venture agreement or other form of business combination, the banking institution shall obtain information pursuant to this section for all entities participating in the application.”

A: All applications for loans or other forms of credit from business applicants should be included. As a general guideline, banks should treat an application for changes to a credit amount or interest rate as a new credit or loan application. Specifically, then, both a line increase and a refinance which changes the loan amount would constitute applications for credit and trigger Section 76.16’s data collection and reporting requirements. A material loan modification, such as a change to the interest rate or loan amount, would also trigger the data collection and reporting requirement. Please note, however, that under Section 76.16(i), reevaluation, extension, and renewal requests do not constitute applications for credit as long as no terms of the transaction change other than its duration or maturity date. Please also note, especially for business applicants who regularly engage in credit applications as described above, that Section 76.16(f)(4)(i) permits banks to reuse data collected from a business credit applicant on subsequent applications for up to 12 months after the data is initially obtained.

A: In this situation, banks should collect data on the loan once the commitment is made, and not as the funds are disbursed. If the data for certain fields are not known at the time the commitment is made, banks should leave those fields blank and update them as the data becomes available. The Department recognizes that there may be circumstances where, at the time of reporting to the DFS for a CRA evaluation, the data for certain fields for some loan commitments may not be known.

A: Section 76.16 covers “any application for credit by a business,” so data should be collected and reported for HMDA-reportable loans and commercial real estate loans if the applicant is a business.

A: Data should not be collected or reported for the purchase of an interest in a credit transaction, such as through a loan participation agreement. Note, however, that a bank who receives an application for credit that results in a loan participation agreement must still collect and report data on the transaction and applicant as usual.

A: No. A lease transaction where the lessor retains title and will receive the property back after the conclusion of the lease term, without any expectation by either party that, for example, ownership of the property will be transferred or that payments made pursuant to the lease agreement constitute anything other than payments in exchange for the temporary use of the property, does not constitute a loan or credit for the purposes of Section 76.16.

A: No. Factoring transactions should not be considered an extension of credit for the purposes of Section 76.16.

A: Yes. Data from all corporate or business entities who apply for a loan or other type of credit should be collected and reported.

A: The originator of the loan should collect and report the data.

A: No.

A: When the business applicant provides information intended as information on the business, that information is not considered to be personally identifiable information for the purposes of Section 76.16 data collection requirements.

A: No. Banks should input the entire interest rate unless the interest rate is a repeating decimal, such as 1/3 of a percent.

A: Banks should input full dollar amounts in the MWOB Business Loan Register tab. Banks should input amounts in thousands of dollars in the Total MWOB Loans by Year tab (note the footnote stating that, “Dollar amounts should be expressed in thousands of dollars”). For banks who elect not to use the Department’s template, data for individual loans should be input as full dollar amounts, and summaries of aggregate data should be input as thousands of dollars.

A: Banks should make a good-faith effort to determine how much the bank spends on each program, including both direct costs (e.g., renting a conference room) and indirect costs (e.g., staff time). The Department understands that some degree of estimation may be required in some circumstances.