RSSThe Consumer Financial Protection Bureau extended Section 1071 compliance deadlines, after the rule was temporarily paused amid a lawsuit challenging the constitutionality of the bureau’s funding structure.
The 290-day delay means lenders with the highest volume of small business loans are now required to start collecting data by July 18, 2025 and submit data by June 1, 2026. Moderate volume lenders must start collecting data by Jan. 16, 2026, and submit data by June 1, 2027; while the smallest volume lenders must start collecting data by Oct. 18, 2026, and submit data by June 1, 2027.
Lenders will be able to use their small business originations numbers from 2022-23 or 2023-24 to determine their initial compliance dates. They can also start collecting data up to one year before their compliance data to test their policies and systems.
“The CFPB does not intend to assess penalties for reporting errors for the first 12 months of collection, and it intends to conduct examinations only to assist lenders in diagnosing compliance weaknesses, so long as lenders engage in good faith compliance efforts,” according to the bureau.
The June 25 interim final rule came after a Texas-based federal court stayed the rule and ordered compliance deadlines to be extended pending the Supreme Court’s ruling in a case challenging the constitutionality of the CFPB’s funding structure. The Supreme Court ruled last month that the bureau is constitutionally funded.
Under Section 1071, lenders must collect and report information about the small business credit applications they receive, including demographic and geographic information, lending decisions and the cost of credit. Lenders will need to furnish data on loans to small businesses with less than $5 million in the last fiscal year, submit Congressionally-required data points and provide additional information typically included in lender files.
The CFPB sees Section 1071 as necessary because of the lack of small business lending data. Loans reportable under the Home Mortgage Disclosure Act will not be covered under the rule, while banks can use third parties to develop the technologies and services to collect and report data tailored to their business model.
