April 28, 2023

CFPB Rule and Enforcement Guidance on Small Business Lending Data Collection

3 min

The Consumer Financial Protection Bureau (CFPB) finalized a new Rule aimed at improving the transparency of and access to credit for small businesses on March 30, 2023. The Rule requires financial institutions to report data on their lending practices for small businesses, including information on the race, ethnicity, and gender of business owners.

The CFPB has also issued an enforcement policy statement that informs covered financial institutions that the CFPB intends to focus its supervisory and enforcement activities, in connection with the new rule in particular, on ensuring that covered lenders do not discourage small business loan applicants from providing responsive data, including responses to lenders’ ECOA-mandated demographic data requests.

Small Business Lending Data Collection Highlights

  • Use in Policymaking – The new data set is expected to provide policymakers and researchers with information about the availability and accessibility of credit for small businesses, particularly those owned by underrepresented groups. The CFPB will also use the data to help it identify potential barriers to credit access and inform efforts to address them.
  • Annual Reporting – Under the Rule, financial institutions with assets over $100 million will be required to report information about their small business lending activities to the CFPB on an annual basis. This information will include the number and amount of small business loans, the borrower's demographic information, and the loan's purpose.
  • Coverage – The CFPB estimates that the new data set will cover approximately 80% of all small business lending in the U.S. The agency also claims the data will be collected in a way that protects the privacy of individual borrowers and does not disclose sensitive financial information.
    Phased Implementation – The Rule requires the largest lenders, which account for most of the small business lending market, to collect and report data earlier than smaller lenders.
  • Specifically, lenders that originate at least 2,500 small business loans annually must collect data starting October 1, 2024. Lenders that originate at least 500 loans annually must collect data starting April 1, 2025. Lenders that originate at least 100 loans annually must collect data starting January 1, 2026. Lenders originating less than 100 loans per year will still be required to adhere to fair lending laws, but not the new data collection and reporting requirements.
  • The Rule amends Regulation B to implement changes to the Equal Credit Opportunity Act (ECOA) made by section 1071 of the Consumer Financial Protection Act of 2010. The enforcement policy guidance is a non-binding general statement of policy articulating considerations relevant to the CFPB’s exercise of its supervisory and enforcement authority.

The CFPB maintains information and resources on small business lending here.

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The CFPB's Field Hearing on Small Business Lending

New York Commercial Financing Disclosure Requirements

California Finalizes Commercial Financing Disclosure Regulations

New York DFS Calls for Increased Regulation of Online Lending in Industry Report