The Consumer Financial Protection Bureau’s (CFPB) final rule today is a massive step backward from the CFPB’s own 2023 rule and from Congress’s intent in enacting Section 1071.
Just three years ago, the CFPB finalized a rule that would have provided transparency into the small business lending market, with a 100-loan reporting threshold, a small business definition to cover businesses with revenues of less than $5 million in assets and a more complete dataset to evaluate fairness and access.
This new rule reverses that progress. By raising the threshold to 1,000 loans, changing the definition of a small business to cover those with revenues of less than $1 million, excluding merchant cash advances and agricultural lending and eliminating key data points such as pricing, the bureau is attempting to gut transparency and the usefulness of the data.
The rule also removes critical demographic data, including disaggregated race and ethnicity and information on LGBTQI+ business owners, further obscuring disparities in access to credit.
A National Community Reinvestment Coalition (NCRC) analysis showed the rule will reduce the number of covered banks from roughly 1,700–1,900 institutions to just 167–176, a drop from about one-third of banks to roughly 3.6%. This means most small business lenders will no longer be subject to public reporting, creating significant blind spots in the market.
“The CFPB is prolonging a lack of transparency that communities have already waited 16 years to get,” said NCRC President and CEO Jesse Van Tol. “The rule today will make it significantly harder to detect patterns of discrimination and reveal the truth behind who is getting credit and who is not.”
