Surey of Terms of Business Lending

SURVEY OF TERMS OF BUSINESS LENDING (FR 2028A)
INSTRUCTIONS
Purpose
The Federal Reserve System uses data from this
survey to measure the cost of business borrowing from
U.S.-chartered banks and U.S. branches and agencies
of non-U.S. (foreign) banks for analysis of
developments in business credit markets.
Reporting Burden
Public reporting burden for this collection of
information is estimated to average 3.7 hours per
response, including the time to gather and maintain
data in the required form and to review instructions
and complete the information collection. Send
comments regarding this burden estimate or any other
aspect of this collection of information, including
suggestions for reducing this burden, to: Secretary,
Board of Governors of the Federal Reserve System,
20th and C Streets, N.W., Washington, DC 20551; and
to the Office of Management and Budget, Paperwork
Reduction Project (7100-0061), Washington, DC
20503.

Branches and Agencies of Foreign Banks (FFIEC 002)
and item 2.c(2) of the Report of Assets and Liabilities
of Non-U.S. Branches that Are Managed or Controlled
by a U.S. Branch or Agency of a Foreign (Non-U.S.)
Bank (FFIEC 002S). Include all such C&I loans to
U.S. addressees made during the report period by the
respondent U.S. branch or agency (excluding those
held in its IBF) (Item 4.a of Schedule C, Column A
minus Column B).
“U.S. addressee” encompasses borrowers domiciled in
the fifty states of the United States, the District of
Columbia, or U.S. territories and possessions,
including U.S. offices or subsidiaries of non-U.S.
(foreign) businesses. For further detail, please refer to
the Glossary entry for “domicile” in the instructions
for the quarterly condition report (FFIEC 031&041 or
FFIEC 002).
Include:
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Survey Scope
This survey covers commercial and industrial (C&I)
loans to U.S. addressees when funds are disbursed to
borrowers during the report period. The report period
covers the first full business week of February, May,
August, and November.
For U.S. commercial banks: The definition of
“commercial and industrial loans” corresponds to that
used for Item 4 of Schedule RC-C, Part I, of the
quarterly Report of Condition (FFIEC 031&041).
Include all such C&I loans to U.S. addressees made
during the report period.

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New loans, takedowns under revolving credit
agreements, notes written under credit lines, and
renewals. Renewals include new loans under
revolving credit agreements that roll over earlier
loans, including conversions of revolving credits
into term loans.
Loans disbursed during the report period, even if
the loans are not entered onto your institution’s
books or loan record system until after the report
period.
Your institution’s portion of drawn loan
participations and syndications when funds are
disbursed during the reporting period. (See the
glossary entry for syndications in the instructions
for the quarterly condition report.)
Overnight loans.

Exclude:
For FFIEC 031 and 041 reporters, C&I loans to U.S.
addressees are reported in Item 4.a of Schedule RC-C,
Part I excluding items noted below. For banks with
foreign offices (FFIEC 031 reporters), include all such
loans that are booked at U.S. (domestic) offices of the
reporting bank (Column B of the FFIEC 031) as well
as at non-U.S. offices, whether in the Bahamas, the
Cayman Islands, or other locations, for which records
are maintained at U.S. offices.
For U.S. branches and agencies of non-U.S.
(foreign) banks: The definition of “commercial and
industrial loans” corresponds to all loans to U.S.
addressees that are booked at the U.S. offices of the
branch or agency or at non-U.S. offices, whether in the
Bahamas, the Cayman Islands, or other locations, for
which records are maintained at U.S. offices. These
loans are reported, respectively in Item 4 of Schedule
C, Part I, excluding items noted below, of the
quarterly Report of Assets and Liabilities of U.S.

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Loans denominated in non-U.S. currencies.
Loans of less than $3,000.
Loans disbursed before the report period that are
entered onto your institution’s books or loan
record system during the report period.
Loans purchased in the secondary loan market.
Purchased open market paper, such as
commercial paper and acceptances, and factored
loans (that is, purchased accounts receivable).
Loans made by an international division,
international operations subsidiary, or Edge or
Agreement subsidiary of your institution.
Loans made to non-U.S. addressees (business
firms domiciled outside of the fifty states of the
United States, the District of Columbia, or U.S.
territories and possessions).
Construction and land development loans secured
by real estate.

SURVEY OF TERMS OF BUSINESS LENDING (FR 2028A)
INSTRUCTIONS
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APR—in effect on the date that the loan was
disbursed (reported in column 1). The stated
nominal rate usually is shown in the note or
agreement. If the loan amount reported in column
2 is an advance, takedown, or renewal under an
existing loan commitment, enter the rate of
interest for this advance only. For example, if the
stated rate of interest is 50 basis points over
prime, the nominal rate of interest reported here
should be the prime rate for the day of the
takedown plus 50 basis points.

Loans resulting from unplanned overdrafts to
deposit accounts. Note, however, that loans
extended as part of a cash management program
that would be classified as C&I loans on the
quarterly condition report should be reported on
the survey.
Existing loans on which the rate changes during
the survey week when no additional funds are
disbursed during the survey week. For example,
an outstanding loan advance that has an interest
rate tied to prime should not be reported when the
prime rate changes during the survey week.
Similarly, an outstanding loan that is repriced
during the survey week in accordance with a
lending grid (for example, a loan rate tied to a
borrower’s financial ratios or bond rating) should
not be reported since no funds are disbursed
during the survey week.
Intercompany loans.
Loans held for trading purposes.
Loans to financial institutions.

Report the rate in percent to three decimal places;
for example, for a loan made at 8-1/4 percent,
enter
“8.250.”
4.

Enter
0
1
2
4
12
24
52
360 or 365

Column number:
1.

Date made. Enter the calendar date the funds
reported in column 2 were disbursed, also known
as the effective date of the loan. For example, for
funds disbursed on May 3, enter ‘‘0503.”
For the purpose of the survey, a loan renewal is
viewed as a new disbursal of funds. Thus, the
effective date of the loan to be entered into
column 1 is the date of the renewal.

Face amount of loan. Enter the face amount of
the loan in dollars even if held at fair value.

5.

Prime Rate used as Base pricing rate.
Check “yes” when the loan rate is based on your
institution’s own prime (as reported in the FR
2028S supplement to this report), any other
lender’s prime rate, a combination of other prime
rates, or publicly reported prime rate.

If the funds disbursed represent the first advance
of a loan agreement or an addition to an existing
loan, enter only the amount advanced on the date
shown in column 1. A loan advance or takedown
refers to the actual drawing of funds by a
borrower under a loan commitment agreement,
not the amount of the facility.

Check “no” when the loan rate is based on any
other rate (for example, the federal funds rate, the
rate on commercial paper, bankers acceptances,
or the London Interbank Offered Rate (LIBOR))
or if no base rate is used to determine the loan
rate.

If the loan represents a renewal or renegotiation
of an existing loan, enter only the amount
renewed or renegotiated on the date in column 1.
If the loan is a participation or syndication, enter
only your institution’s portion of the loan in this
column.
3.

if interest is compounded or paid:
Only at maturity
Annually
Semiannually
Quarterly
Monthly
Semimonthly
Weekly
Daily

For example, if interest is calculated on a simple
basis (with no compounding over the period of
repayment) and is paid monthly, enter ‘‘12” for
monthly. Similarly, if interest is calculated on a
simple basis and paid quarterly, enter ‘‘4” for
quarterly.

Do not report the date the loan was entered onto
your institution’s books or loan record system if
that date differs from the date of disbursement.
2.

Frequency with which interest is compounded
or paid. Enter the frequency with which interest
is compounded, or the frequency with which
interest is paid to the lender, whichever is greater.

6.

Nominal rate of interest. Enter the stated
nominal rate of interest--not the effective rate or

2

Next date on which the loan rate may be
recalculated. Enter the first date in
YYYY/MM/DD format on which the rate on the
loan will be recalculated to reflect changes in the
base rate, if any.

SURVEY OF TERMS OF BUSINESS LENDING (FR 2028A)
INSTRUCTIONS
takedown advanced on the date reported in
column 1. Do not include any payments
scheduled for the facility prior to the date
reported in column 1.

For a loan rate that can be recalculated at any
time (as with many prime-based loans), enter the
date made, as reported in column 1.

For loans with a single scheduled repayment of
principal, enter “1.”

If the interest rate on the loan is fixed for a period
less than the maturity of the loan (for example, a
loan that matures in 90 days but has a rate that is
recalculated every 30 days relative to the 30-day
LIBOR), enter the date on which the interest rate
can first be recalculated.

If repayments are not explicitly scheduled, enter
“0.”
For loans with no stated maturity, enter ‘‘0” in
columns 7 and 9 .

If the interest rate is fixed for the life of the loan,
enter the loan’s date of maturity, as reported in
column 7.

10. Commitment status. Commitments are broadly
defined to include all promises to lend that are
expressly conveyed, orally or in writing, to the
borrower. Commitments generally fall into two
types of arrangements: formal commitments and
informal lines of credit.

If the interest rate is fixed and the loan has no
stated date of maturity, enter ‘‘0.”
7.

Maturity date. Enter either the date in
YYYY/MM/DD format of maturity or the date of
the final repayment of the loan amount. Enter the
year, month, and day on which the loan matures.

A formal commitment is a commitment for
which a bank has charged a fee or other
consideration or otherwise has a legally binding
commitment. It is usually evidenced by a
binding contract, to lend a specified amount,
frequently at a predetermined spread over a
specific base rate. It requires that the borrower
meet covenants in the contract and pay a fee on
the unused credit available. These include
revolving credits under which the borrower may
draw and repay loans for the duration of the
contract.

For loans made under a revolving loan facility or
other types of commitments, enter the maturity
date of the takedown disbursed on the date
reported in column 1. Do not report the date of
termination of the commitment.
For renewals, enter the maturity date of the
renewal made on the date reported in column 1,
not the maturity date of the original loan.

A line of credit is defined as an informal
arrangement under which the lender agrees to
lend within a set credit limit and to quote a rate
on demand for a takedown amount and maturity
requested by the borrower. These arrangements
may not be legally binding.

If a revolving credit is converted to a term loan
during the survey week, enter the maturity date of
the new term loan.
For loans with no stated maturity, enter ‘‘0” in
columns 7 and 9 .
8.

Authorizations or internal guidance lines, where
the customer is not informed of the amount, are
not to be considered as commitments.

Prepayment Penalty.
Check “yes” under “Prepayment penalty” when
the borrower must pay a penalty or fee
(sometimes called a “breakage fee”) in order to
repay or reprice the loan before its scheduled
maturity or the next scheduled date on which the
rate is scheduled to be reset (if any). If no such
fee or penalty applies, check “no” under
“Prepayment penalty.”

9.

If the loan was made under a formal or informal
commitment, enter (rounded to thousands of
dollars) the amount of the total commitment
(both used and unused) under which this loan was
made. If the loan was not made under a formal or
informal commitment, enter “0.”
If your institution was part of a syndicate making
a larger loan to this borrower or the loan was a
participation, the amount of the commitment
reported in this column should be only the
amount that your institution has agreed to lend.

Number of scheduled repayments over term of
loan. Include the number of scheduled
repayments of principal over the term of the loan.
Exclude interest-only payments.
For loans made under a revolving loan facility,
enter the number of repayments scheduled for the

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SURVEY OF TERMS OF BUSINESS LENDING (FR 2028A)
INSTRUCTIONS
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11. Date of Commitment. If the loan was made
under a formal agreement, please enter the date
on which the pricing terms under which the loan
was made became effective. (Pricing terms
would include, for example, spreads over base
rates at which the borrower is able to draw down
funds while the commitment remains in effect.)
This date commonly would be the date on which
the formal loan commitment letter was signed or
became legally binding. If the commitment
agreement under which the loan was made is a
renewal of an earlier commitment, enter the
renewal date and not the date of the original
commitment. If the loan was made under an
informal commitment or if it was not made under
any commitment, enter zero.

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12. Loan secured. Indicate by checking the
appropriate space whether the loan is secured by
collateral of any kind.

The customer has been with your institution for
many years and has an excellent credit history.
The customer’s cash flow is steady and well in
excess of required debt repayments plus other
fixed charges.
The customer has an AA or higher public debt
rating.
The customer has excellent access to alternative
sources of finance at favorable terms.
The management is of uniformly high quality and
has unquestioned character.
The collateral, if required, is cash or cash
equivalent and is equal to or exceeds the value of
the loan.
The guarantor, if required, would achieve
approximately this rating if borrowing from your
institution.

Low risk (enter ‘‘2”). Loans in this category are very
unlikely to result in a loss. They would have a level of
risk similar to a loan with the following
characteristics:

13. Risk rating. If your institution assigns internal
risk ratings to business loans, enter the numerical
designation from the list provided below that
most closely matches the definition of the
internal rating assigned to this loan. Do not enter
your institution’s own internal risk rating.

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If your institution rates loans, but a particular
loan is unrated, or not yet rated, enter ‘‘0” for that
loan.

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If your institution does not assign internal risk
ratings to business loans, either (a) leave this
column blank or (b) use the categories presented
below to make the assignment.

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The definitions provided here take account of
both the characteristics of the borrower and the
protections provided in the loan contract. Note
that the definitions are intended to characterize
ranges of risk; hence the definition of your
institution’s internal rating for a loan probably
will not exactly match any of the provided
definitions. Enter the numerical designation that
corresponds most closely to the internal rating of
your institution.

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The customer has an excellent credit history.
The customer’s cash flow is steady and
comfortably exceeds required debt repayments
plus other fixed charges.
The customer has a BBB or higher public debt
rating.
The customer has good access to alternative
sources of finance at favorable terms.
The management is of high quality and has
unquestioned character.
The collateral, if required, is sufficiently liquid
and has a large enough margin to make very
likely the recovery of the full amount of the loan
in the event of default.
The guarantor, if required, would achieve
approximately this rating if borrowing from your
institution.

Moderate risk (enter ‘‘3”). Loans in this category
have little chance of resulting in a loss. This category
should include the average loan, under average
economic conditions, at the typical lender.
Loans in this category would have a level of risk
similar to a loan with the following characteristics:

The risk rating categories provided here are not
intended to establish a supervisory standard for
the maintenance or reporting of internal risk
rating systems.

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Minimal risk (enter ‘‘1”). Loans in this category
have virtually no chance of resulting in a loss. They
would have a level of risk similar to a loan with the
following characteristics:

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4

The customer has a good credit history.
The customer’s cash flow may be subject to
cyclical conditions, but is adequate to meet
required debt repayments plus other fixed charges
even after a limited period of losses or in the
event of a somewhat lower trend in earnings.
The customer has limited access to the capital
markets.
The customer has some access to alternative
sources of finance at reasonable terms.

SURVEY OF TERMS OF BUSINESS LENDING (FR 2028A)
INSTRUCTIONS
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The firm has good management in important
positions.
Collateral, which would usually be required, is
sufficiently liquid and has a large enough margin
to make likely the recovery of the value of the
loan in the event of default.
The guarantor, if required, would achieve
approximately this rating if borrowing from your
institution.

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Acceptable risk (enter ‘‘4”). Loans in this category
have a limited chance of resulting in a loss. They
would have a level of risk similar to a loan with the
following characteristics:
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The customer does not have access to the capital
markets.
The customer has some limited access to
alternative sources of finance possibly at
unfavorable terms.
Some management weakness exists.
Collateral, which would generally be required, is
sufficient to make likely the recovery of the value
of the loan in the event of default, but liquidating
the collateral may be difficult or expensive.
The guarantor, if required, would achieve this
rating or lower if borrowing from your
institution.

Special mention or classified asset (enter ‘‘5”).
Loans in this category would generally fall into the
examination
categories:
“special
mention,”
“substandard,” “doubtful,” or “loss.” They would
primarily be work-out loans, as it is highly unlikely
that new loans would fall into this category.

The customer has only a fair credit rating but no
recent credit problems.
The customer’s cash flow is currently adequate to
meet required debt repayments, but it may not be
sufficient in the event of significant adverse
developments.

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SURVEY OF TERMS OF BUSINESS LENDING (FR 2028A)
Questions and Answers
threshold for inclusion on the FR 2028A.
Report single charges that exceed $3,000.
Do not report outstanding balances.
However, if virtually all business credit card
charges at your institution are under the
$3,000 threshold and it would be a burden to
report the larger ones, you may exclude
them. If you do not know the size of the
charges that make up the balance, you may
exclude them.

Survey Scope
1)

The survey covers the first full business weeks
of February, May, August, and November. Do
we report loans made each day?

A. Report loans made only on the days your
Federal Reserve Bank asks you to report.
Depending on the size of your institution, your
Federal Reserve Bank may negotiate the number
of days on which loans made should be reported.
Once this determination is made, loans should be
reported on consistent days each quarter.

5) Should we report business loans
disbursed under overdraft facilities?

2) It is burdensome to eliminate loans of less
than $3,000 from our report. May we
include them?

A. On the Call Report, loans resulting from
unplanned overdrafts are excluded from C&I
loans (they are reported in other loans), so they
should not be reported here. However, loans
extended under cash management arrangements
that would be included in C&I loans on the Call
Report should be reported if they exceed the
$3,000 threshold for inclusion on the FR 2028A.

A. Yes, you may include loans of less than
$3,000 if it is easier for you to do so.

3) Under what circumstances is a drawdown
under a line of credit considered a
rollover? When should we report such
loans on the FR 2028A?

6) Loans are posted to our computerized
record system with a lag of a few days.
Can we report the loans that are posted to
our computerized record system during
the survey week rather than loans that
are disbursed during the survey week?

A. A new drawdown under a line of credit
that is used to pay off a previous drawdown
is a rollover and should be reported on the
FR 2028A. For example, many drawdowns
under lines of credit that are priced off of the
30-day LIBOR have a maturity of 30 days.
Such drawdowns may be rolled over after 30
days; that is, a new drawdown is used to pay
off the maturing drawdown. In this case, the
new loan should be reported on the FR
2028A. In contrast, many drawdowns priced
off of the prime rate have no stated maturity,
and so they do not need to be rolled over.
NOTE: Outstanding prime-based loans
should not be reported when the prime rate
changes. Similarly, term loans that reprice
from time to time (for example, those priced
off of the 30-, 60-, or 90-day LIBOR), are
not new loans, and so such loans should not
be reported when they reprice.

A. No. The lag between the date of disbursement
and the date the loan is posted would lead to
errors since some of the reported loans would not
have been extended during the survey week. As a
result, their terms would not necessarily be
similar to those on loans that were extended
during the survey week.

Column 1: Date made
7) Can we report the date the loan is posted
rather than the date the loan was
disbursed?
A. No, because then the Federal Reserve would
compare the rates charged on the loans to market
rates on the days the loans were posted rather
than the days the loans were disbursed. Because
market rates can move significantly from day to
day, this reporting error could lead to errors in the
measurement of loan spreads. In addition, for
loans with short maturities, this type of
misreporting can lead to loans having reported
dates of maturity before the reported date that
they were made.

4) Should we report business credit card
loans?
A. In principle, single charges of more than
$3,000 should be reported since they are
included in C&I loans on the Call Report
and the FFIEC 002 and they exceed the

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SURVEY OF TERMS OF BUSINESS LENDING (FR 2028A)
Questions and Answers
Column 3: Nominal rate of interest
A. In this case, the base rate should not be
reported as prime. This situation should not be
confused with loans that allow the borrower to
choose from a menu of base rates and spreads. In
that case, check “yes” if the base rate chosen by
the customer for the particular loan being
reported is the prime rate and check “no” if the
base rate is other than the prime rate.

8) Our institution calculates an effective
loan rate for internal purposes. Should we
simply report that rate?
A. No, report the stated nominal rate on the loan.
The Federal Reserve will calculate effective rates
on a consistent basis for all respondents based on
the nominal rate and compounding frequency
reported on the FR 2028A. Column 4: Frequency
with which interest is compounded or paid

Column 6: Next date on which the loan rate may be
Recalculated

12) Rates on some loans at our institution
adjust in ways not covered in the
instructions. For example, the rates on
some loans are tied to the prime rate as of
the first day of each month. How should
we report the next date on which the loan
rate may be recalculated in this case?

9) At our institution interest is sometimes
calculated and accrued in an interest
receivables account more frequently than
the balance of that account is paid off by
the borrower. Should the frequency of
compounding be reported as the
frequency with which interest is accrued
in the interest receivables account or the
frequency with which the borrower pays
the accrued interest?

A. Generally, report the first date on which the
rate to be charged is subject to change. In the
example, this date would be the first of the next
month after the loan was made.

A. In this case the frequency to report depends on
whether interest is charged on the account
balance in the interest receivables account. If
interest is charged on the account balance, then
you should report the frequency with which
interest is accrued in the receivables account. If

Column 8: Prepayment Penalty
13) At our institution, fixed-rate loans can be
prepaid at the borrower’s discretion, but
the borrower has to make up the
difference between the interest that would
have been paid on the loan over its
remaining term and the interest that our
institution can earn over the same period
by investing the amount of the
prepayment. Does this arrangement
constitute a prepayment fee?

interest is not charged on the account
balance, then report the frequency with
which the borrower pays the accrued
interest.
Column 5: Prime Rate used as Base pricing
rate
10) Our institution prices some loans off of
our own prime and other loans off
another prime rate reported in the
financial press. Should both types of loan
be reported based on the prime rate?

A. Yes, such a loan should be reported as having
a prepayment fee.

Column 10: Commitment status
14) Sometimes our institution makes loans as
part of a participation, and we do not
know the commitment status or amount.
In such cases, what amount should we
report as the amount of the commitment?

A. Yes, report both types of loans based on
the prime rate.
11) Should a loan be reported as being prime
based if the loan rate is based on a
formula that incorporates more than one
base rate including the prime rate? (For
example, a loan rate that can be priced off
of either the prime rate or the fed funds
rate, depending on the level of the two
rates.)

A. In this case, enter ”0” as the amount of
commitment.

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SURVEY OF TERMS OF BUSINESS LENDING (FR 2028A)
Questions and Answers
A. If your institution does not find it
excessively burdensome, such ratings would
be valued by the Federal Reserve. However,
respondents that do not have internal ratings
need not provide risk ratings on the FR
2028A.

Column 11: Date Commitment Extended
15) If the commitment was first arranged as
an informal line of credit and later
formalized, which date should be
reported?
A. Report the date on which the commitment was
formalized.

21) Our institutions’ internal rating system
does not match the ratings provided in
the instructions. Can we report our
institutions’ internal ratings?

16) If the commitment has been renewed since it
was first agreed upon, should the date the
pricing terms were set be the date of the
original terms or the date of the most recent
renewal?
A.

A. No. Please use the definitions provided in the
instructions. The reported ratings have to be
based on a common set of definitions so that the
Federal Reserve can understand the meaning of
the ratings assigned, calculate average ratings
across institutions, and make comparisons of
ratings over time.

The date reported should be for the most
recent renewal of the commitment.

17) If there is a difference between the date the
commitment was formally agreed upon and
the date that the commitment became
effective, which date should be given?

22) The definition of our institution’s internal
ratings do not line up with the definitions
provided in the instructions. How should
we translate the ratings?

A. Report the date on which the pricing terms
contained in the commitment were set.

A. It is inevitable that there be some slippage
between the internal ratings of individual lenders
and the common definitions used on the FR
2028A. For each internal rating at your
institution, report on the FR 2028A the rating
provided in the instructions with the definition
that matches most closely.

Column 12: Loan secured
18) On small business loans our institution
often requires the principals of the
business borrowing the money to provide
personal guarantees for repayment.
Should these loans be classified as
secured?

23) Our institution reports hundreds of loans
each quarter. How can we take the time
to judge the riskiness of each of them
when preparing our report?

A. No, the loan should be classified as secured
only if it is backed by specific assets.

A. It should not be necessary to exercise any
judgment when preparing the report. An
employee of your institution familiar with your
internal risk-rating system should prepare a
correspondence, or mapping, from your internal
risk ratings to the ratings defined in the
instructions. With that correspondence, you can
convert the internal ratings into the common
ratings without any additional judgment. Of
course, if your institution changes the definitions
of its internal risk ratings, the correspondence
will have to be adjusted. Please check before
each survey week to see if the definitions of your
internal ratings have changed. A worksheet is
provided for your institution’s use in mapping
your internal risk ratings to the ratings defined for
the FR 2028A.

19) Our institution does not consider a loan to
be collateralized if the collateral is very
small relative to the size of the loan, or if
we believe that the collateral is unlikely to
be collected in the event of default. Should
such loans be classified as secured when
reported on the FR 2028A?
A. No, you may use your institution’s definition
of whether or not a loan is collateralized.
Column 13: Risk rating

20) Our institution does not rate loans.
Should we nevertheless report risk
ratings based on the definitions provided
in the instructions?

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SURVEY OF TERMS OF BUSINESS LENDING (FR 2028A)
Questions and Answers
A. The risk rating reported on the FR 2028A
should take into account all protections provided
in the loan contract. In this case, the loan should
be reported as not very risky because the
excellent collateral makes it very unlikely that
your institution will sustain a loss.

24) Our institution does not rate loans until
after they have been made, hence we
cannot include this information on the FR
2028A. How should we report risk
ratings?
A. If your institution does not have loan risk
ratings available at the time of the survey, then it
should follow the instructions for institutions that
do not rate loans (see the survey instructions and
question 20).

28) Our institution’s internal risk ratings are
for borrowers rather than for loans, and
so do not take into account the
protections provided by the loan contract.
Should we still try to report loan risk
ratings?

25) The risk ratings on our loans change over
time, reflecting changes in customers’
balance sheets and business prospects. Do
we need to provide updates?

A. Yes. Since the rating of the customer will
generally have a significant effect on the rating of
the loan, please report the loan risk rating that
most closely corresponds to your institution’s
internal rating of the borrower. Although this
information may not be as precise as it is for
institutions that rate loans, it is preferable to
having no information at all.

A. The survey only collects information on
ratings when loans are disbursed. Do not provide
updated information on loan risk ratings unless
the original data reported were in error.

26) Our institution’s ratings are limited to
pass or not pass. How should we map
these ratings into the common ratings?

29) Our institution occasionally makes loans
that have more than one risk rating, for
example a better rating for that part of
the loan that is secured. How should we
report the rating on such a loan?

A. In this case, follow the instructions for
institutions that do not rate loans (see the survey
instructions and question 20).

A. In this case, choose the rating that applies to t
he largest part of the loan. If the ratings are split
evenly, choose the highest–risk rating.

27) How should we rate a loan that is quite
risky in terms of the probability of
default, but has excellent collateral?

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SURVEY OF TERMS OF BUSINESS LENDING (FR 2028A)
Risk Rating Worksheet
This worksheet is for a respondent’s internal use in mapping its own internal risk ratings to the ratings defined for the
FR 2028A. It should be revised if the institution changes its risk ratings. This worksheet should not be submitted to the
Federal Reserve Bank.

Equivalent FR 2028A Rating 1
1 Minimal risk - Loans in this category
have virtually no chance of resulting in a
loss.
2 Low risk - Loans in this category are
very unlikely to result in a loss.
3 Moderate risk - Loans in this category
have little chance of resulting in a loss.
This category should include the average
loan, under average economic conditions,
at the typical lender.
4 Acceptable risk - Loans in this category
have a limited chance of resulting in a loss.
5 Special mention or classified asset Loans in this category would generally fall
into the examination categories: “special
mention,” “substandard,” “doubtful,” or
“loss.” They would primarily be work-out
loans, as it is highly unlikely that new loans
would fall into this category.

Respondent Rating(s)

1

The complete definitions of the rating categories are provided in the instructions.

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