Effective Date Set on CFPB Policy Guidance for Collecting Small Business Lending Data

Enforcement and supervisory policy guidance on a new CFPB rule on the collection of small business lending data was published in the Federal Register. The effective date is August 29, 2023.

The CFPB enforcement and supervisory policy guidance is concurrent with the final rule, and states that financial institutions' data requests to applicants must be (i) prominently displayed, (ii) easy for applicants to respond to and (iii) made prior to notifying the applicant of the lender’s decision on their application for credit.

As previously covered, the final rule was adopted pursuant to Dodd-Frank Section 1071 ("Small business data collection"). The requirements are in new Subpart B ("Small Business Lending Data Collection") to Regulation B ("Equal Credit Opportunity Act" or "ECOA"). The requirements apply to any entity that has "originated" 100 or more credit transactions to small businesses, as defined under the Small Business Act, in each of the previous two calendar years. The CFPB stated that financial institutions within the scope of the rule, including certain depository institutions and nonprofit lenders, will be required to submit collected data on applications for credit from small businesses. Lenders will be provided with a sample data collection form to reference when collecting demographic data from applicants. The CFPB stated that financial institutions will be required to submit data collection reports to the CFPB on or before June 1 of each calendar year.