ALEXANDRIA, Va. — Credit unions may reclassify a construction and development loan as a member business loan when the level and kinds of risks for which those limits are in place are no longer present, NCUA recently advised.

A query sent to NCUA asked when can a credit union may reclassify a C&D loan, as simply a member business loan so the loan is not subject to the additional C&D loan requirements in NCUA's member business lending rule.

Factors NCUA may consider in determining if reclassification is permissible include whether the speculative project tied to the loan has been completed and has stabilized to the point where either the project is a viable ongoing business concern with sufficient cash flow to service the debt on an ongoing basis or can be sold for an amount sufficient to fully repay the loan, wrote NCUA Associate General Counsel Sheila Albin in a March 17 opinion letter. NCUA will also consider if the loan was refinanced whether it would still be classified as a C&D loan under the member business lending rule, she added.