The CFPB has finalized sweeping revisions to its small business lending data rule, significantly narrowing its scope and delaying compliance as regulators respond to industry concerns.
The rule, issued under Section 1071 of the Dodd-Frank Act, requires lenders to collect and report data on credit applications from small, minority-owned and women-owned businesses. The CFPB said the changes are intended to "streamline the rule, reduce complexity for lenders, [and] improve data quality."
Among the most notable revisions, the Bureau raised the reporting threshold from 100 to 1,000 loans annually, reduced the definition of a small business to firms with $1 million or less in revenue and eliminated several data points, including pricing and denial reasons. The rule also excluded certain products, such as merchant cash advances and agricultural loans.
The compliance date has been pushed to Jan. 1, 2028.
Credit union leaders welcomed the changes.
"Credit unions are aligned with the goals of Section 1071 to ensure small business lending is meeting community development needs and is accessible to all lenders, particularly those owned by women and minorities. These goals are woven into the credit union mission. But as we often see, the original rulemaking was significantly burdensome and would have had an adverse effect on small business lending. We appreciate the bureau reconsidering this rule, listening to credit unions and providing meaningful relief," America's Credit Unions President/CEO Scott Simpson said.
While banks and credit unions largely support the revisions, some advocacy groups warned the scaled-back approach could limit transparency into lending disparities.
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