Section 1071 Rulemaking

On March 30, 2023, the CFPB issued a final rule to implement section 1071. Although the CFPB’s final rule has been delayed and continues to be challenged in court, section 1071 has not been repealed, and advocacy on the rule’s compliance burden – which will be passed on to small businesses – and invasion of privacy remain critical.

The final rule applies to banks, credit unions, fintechs and other nonbank lenders that make at least 100 small business loans in each of the two preceding calendar years. Reporting will be required on loans originated as well as applications that do not result in loans. The CFPB expanded the 13 data points Congress mandated, requiring lenders to report a total of 81 data fields including the race, gender, and ethnicity of the business's principal owners, and whether the business is owned by minorities, women, and/or LGBTQI+ individuals.

The ABA and the Texas Bankers Association (TBA) challenged the final rule in Federal court in Texas on several grounds, including whether the CFPB’s funding structure is constitutional. On July 31, 2023, the court agreed to stay the final rule’s compliance dates until the Supreme Court rules on a separate legal challenge to the constitutionality of the CFPB’s funding structure. The court also ordered the CFPB to extend the tiered compliance deadlines to compensate for the time period that runs from July 31, 2023 until the Supreme Court rules in the other case.