The Consumer Financial Protection Bureau (CFPB) finalized the Rule implementing Section 1071 of the Consumer Financial Protection Act’s requirements that lenders make data available to the public about their small business lending activity. Under this new Rule, lenders will collect and report information about the small business credit applications they receive, including geographic and demographic data, lending decisions, and the price of credit. The CFPB asserts: 

“Now, for the first time, data on small business lending will give investors and lenders more insights to identify new opportunities that support economic growth, help policymakers measure the effectiveness of any government programs, and provide a data-driven approach to detect potential discrimination.” 

The Rule, completed through amendments to Regulation B implementing the Equal Credit Opportunity Act, establishes a phased-in approach to compliance. The largest lenders are required to collect and report the new data earlier than smaller lenders, as follows: 

  • Lenders that originate at least 2,500 small business loans annually must collect data starting October 24, 2024. 
  • Lenders that originate at least 500 small business loans annually must collect data starting April 1, 2025. 
  • Lenders that originate at least 100 small business loans annually must collect data starting January 1, 2026. 

Small businesses will be able to self-identify as women-, minority-, or LGBTQI+ -owned. Importantly, lenders will be able to rely on business and other information provided by the small business, and loan officers will not be required to make their own determinations of the applicant’s race, ethnicity, or any other demographic information. The CFPB plans to provide “Application Programming Interfaces” to assist in the development of accurate and efficient data reporting tools. 

Small business lending data will be reported on a calendar year basis to the CFPB on or before June 1 of the following year. The CFPB released with the Final Rule technical instructions for the submission of small business lending data in a Financial Instructions Guide. There are 81 field values reported under the new rule including: Ethnicity, Race and Sex/Gender of principal owners; Credit type and purpose; Action Taken and Action Taken Date; Pricing information (interest rate, margin, total origination charges, broker fees, etc.); Gross annual revenue, and Number of workers. 

ADI will continue to review and provide information and direction concerning the final rule requirements in the upcoming months and years.