Washington, D.C. — The Consumer Financial Protection Bureau released its final 1071 small business lending data rule yesterday, which severely weakens key requirements to collect demographic information from borrowers.

Graciela Aponte-Diaz, vice president of community engagement at the Center for Responsible Lending (CRL), made the following statement:

Less data results in less transparency and less understanding of the small business marketplace. Unlike mortgage lending, small business credit historically lacked standardized data on approvals, pricing and borrower demographics.

Section 1071 of the Dodd-Frank Act was designed to help detect discrimination, identify unmet credit needs in small business lending and lessen disparities in lending to historically marginalized borrowers. The final rule does not live up to the spirit Congress intended.

The rule exempts roughly 90 percent of depository institutions from reporting demographic data. Without comprehensive, standardized data, policymakers and advocates will lack the tools they need to identify gaps, enforce fair lending laws and ensure capital is distributed equitably for years to come.

Additional Background

The final rule reduces the amount of data collected the following ways:

  • It lowers the number of financial institutions that must report data by raising the reporting threshold from 100 to 1,000 loans per year. This exempts roughly 90 percent of depository institutions.
  • It narrows which businesses are covered by lowering the revenue threshold for reported loans to under $1 million (down from $5 million in the 2023 rule), excluding many small businesses that still face barriers to fair credit.
  • It strips the dataset down to only those data points explicitly stated in the law, which removes data that could help identify discrimination against specific groups of borrowers, such as women, rural communities and people of color.
  • It excludes certain types of loans, such as farm loans and merchant cash advances. The latter offers capital to businesses with low eligibility for traditional loans and has been historically predatory.

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Press Contact: Vincenza Previte vincenza.previte@responsiblelending.org