House passes Resolution to Reverse CFPB Rule Requiring Banks to Collect Small Business Loan Borrower Data 

“I applaud the House for passing S.J.Res.32 condemning the CFPB’s relentless attack on Main Street America. Small businesses are the backbone of the American economy, and it is crucial that they can access affordable credit to support and grow our communities. During a time where small businesses are facing crushing inflation and increasing borrowing costs, it is important that we put an end to the CFPB’s broad, burdensome, and difficult to implement rulemaking” says House Small Business Chairman Roger Williams. 

Section 1071 requires covered financial institutions to collect and report certain personal information on small business loan applicants and report that to the CFPB. This information includes an applicant’s race, ethnicity and sex and whether the business is minority-owned, women-owned or LGBT-owned. 

In order to comply with the CFPB rule, financial institutions would have to collect information about applicants, including the applicant’s census tract, North American Industry Classification System and years in business—among other information.

• The rule applies to financial institutions that originated at least 100 small business loans in each of the two preceding calendar years. 
• Based on the number of credit transactions for small businesses, covered financial institutions must comply with the final rule beginning Oct. 1, 2024; April 1, 2025; or Jan. 1, 2026.
• A small business is defined as a company with $5 million or less in revenue from the previous fiscal year.

In Oct. 2023, the Senate passed the Congressional Review Act resolution of disapproval of the CFPB rule to implement Dodd Frank Section 1071.