CFPB Finalizes Narrowed Small-Business Lending Data Rule

The Consumer Financial Protection Bureau (CFPB) finalized a scaled-back version of its long-delayed Section 1071 small business lending rule last week, significantly reducing the number of lenders covered and the amount of data required to be collected from borrowers.

The rule, mandated by the Dodd-Frank Act, is intended to improve transparency in small business lending and help regulators identify potential discrimination affecting women- and minority-owned businesses. Under the finalized framework, lenders will begin collecting data in 2028 and reporting it to the CFPB in 2029.

Compared with the Biden-era 2023 version, the Trump Administration’s final rule dramatically narrows the scope of compliance. The rule now applies only to institutions originating at least 1,000 small business loans in each of the prior two years, up from the earlier 100-loan threshold. As a result, roughly 280 lenders will be covered, compared with approximately 2,500 under the previous rule.

The CFPB also reduced required reporting fields from 81 to 13 data points and removed requirements tied to more granular demographic disclosures. Certain loan categories, including agricultural loans and merchant cash advances, were excluded entirely.

Banking and credit union groups welcomed the narrower approach, arguing the original rule imposed excessive compliance burdens that could have reduced credit availability for small businesses. The American Bankers Association and Consumer Bankers Association praised the CFPB for adopting what they described as a more workable framework, though some industry groups said they will continue pushing Congress to repeal Section 1071 altogether.

Consumer advocates and civil rights groups, however, criticized the changes, warning that the scaled-back reporting requirements may limit regulators’ ability to detect fair lending disparities, particularly in underserved and rural communities. Critics also noted that the rule no longer captures detailed pricing data or reasons for loan denials, potentially reducing visibility into discriminatory lending patterns.