Fair Lending and Small Businesses: CFPB Proposed Rule Would Implement Dodd-Frank Small Business Lending Data Collection RequirementsSullivan & Cromwell LLP - September 10, 2021
On September 1, 2021, the Consumer Financial Protection Bureau issued a notice of proposed rulemaking inviting public comment on its proposed rule implementing section 1071 of the Dodd-Frank Wall Street Reform and Consumer Protection Act. Section 1071 amended the Equal Credit Opportunity Act to require financial institutions to collect and report information concerning credit applications made by “women-owned, minority-owned, or small business[es].” Under the proposal, financial institutions would be required to collect and report section 1071 data regarding all applications for credit by small businesses, including those that are owned by women and minorities, but not regarding applications for credit by women-owned and minority-owned businesses that are not small.
If finalized as proposed, the rule would result in the first comprehensive database of small business credit applications in the United States, enabling regulators and the public to identify and address fair lending concerns among small businesses. The database would also enable a range of stakeholders to better identify business and community development needs and opportunities for small businesses, including women-owned and minority-owned small businesses. At the same time, the proposed rule would impose a new comprehensive and potentially highly onerous compliance, collection, reporting, and recordkeeping regime akin to that of the Home Mortgage Disclosure Act.
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