CFPB Aims to Roll Back Biden-Era Small Business Data Collection

The Consumer Financial Protection Bureau (CFPB) has issued a proposal to roll back a Biden-era rule on small business data collection, specifically scaling back both the scope of data to be collected and the number of lenders subject to the rule. The original rule, finalized in 2023 under the Biden administration as Section 1071 of the Dodd-Frank Act, required covered lenders to report demographic and credit data on small business loan applicants, including details on race, ethnicity, and sexual orientation of principal owners.​

Key Changes in the Proposed Rollback

• The new proposal, to be published in the Federal Register, eliminates requirements for lenders to report the race, ethnicity, and sexual orientation of small business owners, including LGBTQ+ status.​

• The definition of a “small business” is expanded to include companies with up to $5 million in gross annual revenue, up from the previous $1 million threshold.​

• Only lenders that make at least 1,000 small business loans per year (up from 100 in the previous rule) will need to comply, exempting many small and community banks.​

• Merchant cash advances, small-dollar business credit, agricultural lending, and lenders under the Farm Credit Administration system are also exempted from these requirements.​

• The compliance deadline for the new proposal is set for January 1, 2028, whereas the previous rule had phased-in deadlines beginning mid-2026.​

• The changes aim to reduce regulatory costs, especially for smaller institutions, maintaining focus on larger-volume lenders.​

Political and Legal Context

• The Biden-era rule faced significant opposition from the banking industry and some lawmakers, leading to multiple lawsuits and a nationwide injunction that was later overturned.​

• Civil rights and community groups have challenged the CFPB and the current administration for abandoning a mechanism they see as vital for ensuring fair access to credit for minority and women-owned businesses.​

• Legislative efforts are ongoing in Congress to repeal or further amend Section 1071 and its underlying reporting requirements.​

Next Steps

• The proposed rollback is open for public comment for 30 days following publication in the Federal Register.​

• The CFPB states that it may consider expanding the rule in the future as it studies challenges faced by larger lenders.​

In summary, the CFPB’s rollback represents a substantial retreat from previous data collection requirements, narrowing both the rule’s scope and its applicability, while meeting longstanding industry criticisms about regulatory burden.​