CFPB Eases Reporting Rules for Small Business Lenders

The Consumer Financial Protection Bureau (CFPB) has reduced the small business data collection and reporting requirements under the Equal Credit Opportunity Act (Regulation B).

The agency posted the final rule on the Federal Register on Thursday (April 30), and the rule is set to be published on Friday (May 1), according to the Federal Register. The compliance date for the rule is Jan. 1, 2028.

In this final rule, the CFPB amended the credit transactions and financial institutions that are covered, the definition of small business, and the data points that are included, per the agency’s summary of the rule.

According to the summary of the final rule, it will exclude merchant cash advances, agricultural lending and small dollar loans; exclude Farm Credit System (FCS) lenders; raise the origination threshold from 100 to 1,000 covered credit transactions for each of two consecutive years; change the gross annual revenue threshold in the definition of small business from $5 million or less to $1 million or less; and modify the collection of data about business ownership status and demographic data.

“The Bureau believes these changes will streamline the rule, reduce complexity for lenders, improve data quality, and advance the purposes of section 1071,” the CFPB said in the summary.

The Independent Community Bankers of America (ICBA) said in a Thursday post on X that it commends the administration for “heeding community banker concerns and for making needed improvements to help mitigate the negative impact of small-business data collection and reporting requirements.”

The American Bankers Association (ABA) said in a Thursday statement that it, together with the Texas Bankers Association and Rio Bank, mounted a legal challenge against an earlier final rule released by the CFPB in 2023. That rule, which requires financial institutions to report data on small business lending, was stayed because of the legal challenge.

“We applaud the CFPB for finalizing a streamlined Section 1071 rule that addresses significant legal and operational concerns from the prior rule while providing clearer, more workable requirements for banks,” the ABA said in its statement.

PYMNTS reported in November that the CFPB proposed revising small business lending requirements under the Equal Credit Opportunity Act and Regulation B and that the proposal marked a significant turning point for lenders navigating digital underwriting and expanding credit access.