Small Business Lending Data Collection Under the Equal Credit Opportunity Act

On September 1, 2021, the CFPB published proposed rulemaking on small business lending data collection. The proposal would require covered financial institutions to annually collect and report to the Bureau data on credit applications for small businesses, including those that are owned by women or minorities.

The proposed rule is 918 pages long. The CFPB also provides a table of contents to the rule, a summary of the rule, and a chart of data points that are collected and reported.

The proposed rule is summarized below.

A covered financial institution would be required to report small business lending data if it originated at least 25 credit transactions that would be covered credit transactions to small businesses in each of the two preceding calendar years.

Covered financial institutions are financial institutions that originated at least 25 covered credit transactions for small businesses in each of the two preceding calendar years.

Covered applications are oral or written requests for a covered credit transaction that is made in accordance with the institution’s procedures. Covered applications do not include reevaluations, extensions, or renewal requests on existing business credit accounts, unless the request seeks additional credit amounts or inquiries and prequalification requests.

Covered credit transactions are extensions of business credit that are not: trade credit, public utilities credit, securities credit, or incidental credit transactions.

Small businesses are businesses whose gross annual revenue for the preceding fiscal year is $5 million or less.

Covered institutions would have to collect and report 20 items related to each request and the requesting business. These include information regarding the business, ownership, location, and the specific loan product terms and details. Generally, employees involved in making any determination concerning a covered application are prohibited from seeing the information collected.

Covered institutions would have to post on their websites that their modified business lending application register is, or will be, available on the CFPB’s website.

Comments will be accepted for 90 days after the publication of the proposed rule in the Federal Register (TBD).

 

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