CFPB extends compliance deadline for small-business lending rule

Bloomberg News

Large banks and financial institutions will have an additional nine months to prepare for compliance with the Consumer Financial Protection Bureau's small-business lending rule, which was stayed pending a Supreme Court decision last month upholding the bureau's funding is constitutional. 

The CFPB said Tuesday that lenders with the highest volume of small-business loans must begin collecting data by July 18, 2025, while lenders with a moderate volume of loans have until January 16, 2026. The smallest-volume lenders have until October 18, 2026, to collect the data. The bureau said the deadline for reporting small-business lending data remains June 1 following the calendar year for which data is collected. 

The CFPB said it does not intend to assess penalties for reporting errors for the first 12 months of collection. As long as lenders engage in good faith compliance efforts, the CFPB said it only intends to conduct examinations to assist lenders in diagnosing compliance weaknesses.

The small-business lending rule, also known as 1071 for its section in the Dodd-Frank Act, was put on hold pending the outcome of a Supreme Court case challenging the constitutionality of the CFPB's funding. The bureau had finalized the rule last year and was promptly sued by bank trade groups to block the rule from taking effect.

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Banks and lenders have long opposed collecting data on small-business loan applicants because the data can be used by government and state regulators to determine if lenders are discriminating against women and minority borrowers. CFPB Director Rohit Chopra has called the rule a "small-business loan census" that will "ensure that banks and nonbanks are serving small businesses fairly." The data collection is similar to mortgage data collected under the Home Mortgage Disclosure Act. 

Bankers had argued that they should not have to comply with the rule because the 5th Circuit Court of Appeals ruled in 2022 that the CFPB's funding was unconstitutional. But the recent Supreme Court decision in May upholding the bureau's funding structure meant compliance with the 1071 rule could proceed. The bureau has issued an interim final rule that extends compliance deadlines to compensate for the period stayed, which was 290 days.

The CFPB said that high volume lenders will first submit data by June 1, 2026, while moderate and low volume lenders will first submit data by June 1, 2027. Under the interim final rule, lenders may continue using their small-business originations from 2022 and 2023 to determine their initial compliance date, or instead use their originations from 2023 and 2024.

The rule allows lenders to collect demographic data up to a year in advance of their compliance date to test procedures and systems. The CFPB also said that its small-business lending data submission platform will be available for open beta testing in August and is encouraging participants interested in beta testing to sign up for updates.