The Community Reinvestment Act (CRA), codified at 12 U.S.C. § 2901 et seq., requires federally insured depository institutions to meet the credit needs of all communities they serve — including low- and moderate-income (LMI) areas — and subjects them to periodic CRA examinations by the FDIC, OCC, and Federal Reserve.
Enacted in 1977, the CRA was Congress's response to redlining — the systematic denial of banking services to LMI communities. The statute (12 U.S.C. §§ 2901–2908, full text at govinfo.gov) prohibits banks from using federally insured deposits to serve only affluent areas while ignoring the communities where they maintain branches and take deposits. Three federal banking regulators share CRA examination authority: (1) The OCC (occ.gov) examines national banks and federal savings associations. (2) The FDIC (fdic.gov) examines state-chartered banks that are not Federal Reserve members. (3) The Federal Reserve (federalreserve.gov) examines state-chartered banks that are Fed members. Each agency rates institutions on a four-point scale: Outstanding, Satisfactory, Needs to Improve, or Substantial Noncompliance. CRA ratings are public and factor into regulatory approvals for mergers, acquisitions, and branch expansions. The 2023 CRA final rule (88 Fed. Reg. 78144; effective January 1, 2026) was the most significant overhaul since 1995. Key changes: expanded CRA assessment areas beyond physical branches to include digital lending footprints, introduced a retail lending test with product-level benchmarks, added a community development financing test, and updated large-bank thresholds ($2B+ in assets). The rule applies to large banks immediately; intermediate banks and small banks have staggered compliance timelines. For small business borrowers: CRA requires banks to track and report small business and small farm loans (under $1M) under the Community Reinvestment Act data collection rules at 12 CFR § 25.42 (OCC) and 12 CFR § 228.42 (Federal Reserve). Banks with poor CRA ratings may increase LMI lending activity — which can translate to more accessible small business loan programs in underserved markets.
CRA creates regulatory incentives for banks to lend in LMI communities. Banks with poor CRA ratings face obstacles to mergers and expansion, so they have strong reasons to maintain active small business lending programs in underserved areas. This translates to dedicated CRA loan products — often with below-market rates or flexible underwriting — for businesses located in or primarily serving LMI census tracts. Ask your bank if your business address falls in a CRA-eligible census tract. The FFIEC's geocoding tool at ffiec.cfpb.gov can check census tract income classification.
A bank rated 'Outstanding' or 'Satisfactory' is in good standing; no issue for borrowers. A bank rated 'Needs to Improve' or 'Substantial Noncompliance' faces regulatory scrutiny and may actively increase LMI and small business lending to improve its score before the next exam. Perversely, a poor CRA rating can signal that the bank is motivated to approve more community lending — not less. CRA ratings are publicly available at ffiec.cfpb.gov/craratings/.
No. CRA applies only to federally insured depository institutions — banks and savings associations. Non-bank lenders (online lenders, MCAs, CDFIs, credit unions chartered under NCUA) are not subject to CRA examination. However, CDFIs receive Treasury certification for serving LMI markets (cdfifund.gov), and some states have proposed extending CRA-like obligations to large non-bank mortgage lenders.