Federal regulatory agency extends deadline for small business loan data reporting compliance
The Consumer Financial Protection Bureau (CFPB) has announced an extension of the compliance deadlines for its small-business data collection rule, originally mandated under the Dodd-Frank Act. The extension comes after legal challenges and a Supreme Court ruling in 2023.
The rule, aimed at increasing transparency of lending details, has faced pushback since its issuance in March 2023. A U.S. district court judge in Texas partially blocked the rule last July, and the Supreme Court recently ruled the CFPB's funding structure is constitutional.
In response, the CFPB has decided to repropose rules implementing Sections 1071 (small business data collection) and 1033 (consumer data sharing) to resolve lawsuits. Proposed rulemakings for Section 1071 are expected by October 2025, while Section 1033 proposals are slated for December.
The extension of 290 days is meant to mirror the amount of time the small-business data collection rule was held up in court. Lenders that originate at least 2,500 small-business loans per year must begin collecting data by July 18, 2025. Those that originate at least 500 loans per year must comply by January 16, 2026, and lenders that originate at least 100 loans per year must comply by October 18, 2026.
The CFPB intends to conduct examinations only to help lenders diagnose compliance weaknesses. In addition, the agency has stated it does not intend to assess penalties for reporting errors for the first year of collection as long as lenders engage in good-faith compliance efforts.
The small-business lending rule covers lending decisions, borrowers' geographic and demographic information, and the price of credit. Its purpose is to fight unlawful discrimination and ensure fair lending practices.
Notably, the rule has been a subject of litigation, with a Texas bank, the state's banking trade group, and the American Bankers Association suing the CFPB less than a month after it was issued. President Joe Biden vetoed the matter in December.
In August, the CFPB plans to open the platform for beta testing, allowing lenders to test their systems and procedures in preparation for eventual compliance. The CFPB has also stated that it will not enforce the rule for non-covered entities during the reproposal process, with enforcement currently a low priority pending the final outcome of regulatory reconsideration.
[1] CFPB Announces Reproposal of Sections 1071 and 1033 Rules to Resolve Lawsuits, CFPB Website
[5] Small-Business Lending Data Collection Rule Undergoing Reproposal Process, CFPB Website
- The extension of the compliance deadlines for the small-business data collection rule by the Consumer Financial Protection Bureau (CFPB) is a result of legal challenges and policy-and-legislation related to the rule, which has been a subject of controversy within the politics of business and finance.
- In the coming years, the CFPB plans to conduct examinations and open a platform for beta testing to aid lenders in preparing for compliance with the small-business data collection rule, a General News topic that has been delayed and undergoing reproposal due to litigation.
