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CFPB Issues Final Small Business Lending Data Collection Rule

Michael Christians • April 9, 2023

On March 30th, the Consumer Financial Protection Bureau (CFPB) issued its long-awaited small business lending data collection rule as mandated by Section 1071 of the Dodd-Frank Act. Below is a high-level summary of the rule.

Scope and Coverage

The rule applies to covered financial institutions, defined as those who originated at least 100 covered loans in each of the two preceding calendar years. A covered loan is an extension of credit made to a small business, which is a business that had $5 million or less in gross revenue during its preceding fiscal year. Covered loans includes loans, lines of credit, credit cards, and agricultural purpose credit products. However, a loan that is a HMDA reportable transaction is not covered by the rule.

Data Collection

A covered financial institution must report the following in connection with an application for a covered loan:

General Application Information

A unique identifier for the application,
The application date,
The application method (e.g., in-person, over the phone, electronically),
The application recipient (e.g., submitted to the financial institution directly or through a third-party),
The type of credit applied for,
The purpose of the loan,
The amount applied for,
The action taken on the application, and
The action taken date.

Information About the Small Business

A census tract based on an address provided by the applicant,
Gross annual revenue of the small business during its preceding fiscal year,
NAICS code for the business,
The number of employees of the small business,
The length of time the small business has been in operation, and
The number of principal owners of the business.

Information Specific to Approved Applications

Amount approved or originated, and
Pricing information (e.g., interest rate, origination charges, etc.)

Information Specific to Denied Applications

Denial reasons.

Demographic Information

Whether the small business is -
Minority-owned,
Women-owned, or
LGBTQI+-owned.
The ethnicity, race, and sex of the small business' principal owners.

NOTE: The applicant's provision of demographic information is voluntary. However, the financial institution is not permitted to provide this information on the applicant's behalf based on visual observation and surname.

Reporting Data

The financial institution must report its data about covered applications not later than June 1st of the year following data collection.

Effective Date

The rule has a tiered effective date depending on the volume of covered loans that a financial institution originates.

October 1, 2024

If the financial institution originated at least 2,500 covered loans in both 2022 and 2023.

April 1, 2025

If the financial institution originated at least:
500 covered loans in both 2022 and 2023, and
Originated at least 100 covered loans in 2024.

NOTE: For purposes of determining the number of covered loans it originated in 2022 and 2023, a financial institution may count the number of covered loans it originates during the 4th quarter of 2023 and multiply that by four.

January 1, 2026

If the financial institution originated at least 100 covered loans in both 2024 and 2025.

You can access a copy of the final rule here. The CFPB also has made several resources available to assist with implementation (e.g., executive summary, fact sheet, etc.) These resources are located here.

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