Financial institutions, fintech companies, and other small business lenders will need to begin collecting a wide array of small business lending data under the Consumer Financial Protection Board’s (CFPB) proposed small business lending data collection rule. The CFPB plans to issue a final rule implementing Section 1071 small-business reporting requirements by the end of March 2023, according to a court filing.
The proposed rule, unveiled Sept. 1, requires entities that have originated at least 25 “covered credit transactions” for small businesses in the previous two calendar years to collect loan data. The data is intended to help the CFPB enforce fair lending laws and could also be used by the government and small business lenders to identify the needs of businesses, said Michelle Lucci, Abrigo Regulatory Compliance Manager.
Lucci said the entities required to collect more data will include more than just banks and credit unions. Online lenders, platform lenders, and fintechs should also consider the ways their operations might be affected.
Once the rule is final, lenders would have 18 months to comply. In the meantime, savvy software providers are preparing to help financial institutions meet the new requirements.