CFPB to Roll Back Small Business Loan Data Collection, California Says No

April 9, 2025

Bob Coleman
Founder & Publisher

CFPB to Roll Back Small Business Loan Data Collection, California Says No

The 10-Year saga of CFPB section 1071 may be coming to an end.

As the new administration signals its intent to eliminate the collection of data on small business loan applications, the future of CFPB Section 1071 is very much in doubt.

Additionally, the House Financial Services Committee has approved a bill to be sent to the House floor which would repeal Section 1071.

However, last week, the state of California advanced legislation to impose CFPB standards for small business lenders within the state.

Section 1071 refers to a provision in the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. It mandates that financial institutions collect and report data on small business loan applications to the CFPB. The goal was to promote transparency and fair lending practices, especially for women-owned and minority-owned small businesses.

For each small business credit application, institutions would have been required to collect and report:

  • Applicant demographics (race, ethnicity, sex of principal owners)
  • Business information (e.g., gross annual revenue, number of employees)
  • Credit requested and credit decision (e.g., loan amount, approval/denial, pricing)
  • Application date and product type
  • Census tract of the business

California’s Approach

California’s oversight of small business lenders falls under its Department of Financial Protection and Innovation (DFPI).

On April 2, the California Senate Banking and Financial Institutions Committee voted to move forward with legislation that would expand the DFPI’s powers to oversee businesses traditionally governed by the CFPB.

The bill, SB 825, passed on a 5-2 party-line vote and will next be considered by the Senate Judiciary Committee.

While federally chartered banks and credit unions are currently exempt from California’s oversight, this exemption does not prevent the DFPI from taking enforcement action against these institutions if they engage in practices deemed unlawful, unfair, deceptive, or abusive under Section 90003.