Texas Court Pauses CFPB Small Business Data Collection Rule
Implementation of the CFPB Small Business Lending Rule has been stopped by a Texas Federal District Court.
The CFPB wants lenders to collect data about small business loan applicants and borrowers similar to consumer mortgage loans — specifically race and geographic area.
To ensure lenders are not engaging in discriminating lending practices.
Reports National Law Review
As issued, the CFPB’s Small Business Lending Rule requires covered financial institutions to collect and report data on small business loan applications, including applications from minority-owned, women-owned, and LGBTQI+-owned small businesses. It also creates the first comprehensive database of small business credit applications in the United States.
The October 26th ruling by the Court says the costs of implementation and compliance for small business lenders will outweigh the CFPB’s argument implementation will “produce significant benefits to small business, the community and lenders and that the public interest does not favor further delay to those requirements taking effect.”
What next?
There are various rulings across the country and they will be addressed by the Supreme Court in the coming months.
Concludes the National Law Review
Given that, small business lenders should have substantially more time to develop programs to facilitate compliance with the rule—additional time they should use wisely, given the significant new compliance obligations and substantial operational changes the rule require