CFPB Finalizes Landmark Small-Business Lending Data Collection Rule
View Debevoise In Depth
- On March 30, 2023, the Consumer Financial Protection Bureau (“CFPB”) published its long-anticipated final rule (the “Final Rule”) implementing the small business lending data collection requirements set forth in section 1071 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Section 1071”).
- Section 1071 amended the Equal Credit Opportunity Act to require that financial institutions collect and report to the CFPB data related to applications for credit, notably from those made by women-owned and minority-owned small businesses.
- Under the Final Rule, covered financial institutions are required to collect and report application data for a range of credit transactions to fulfill Section 1071’s dual statutory purposes of (1) facilitating enforcement of fair lending laws and (2) enabling the identification of business and community development needs and opportunities.
- Covered financial institutions should consider preparing well in advance of the compliance deadlines to comply with the Final Rule’s significant data collection and reporting obligations and dedicate special attention to developing procedures for encouraging responses to demographic data requests from applicants.