CFPB Issues Interim Final Rule Adjusting Compliance Timelines for Small Business Lending Data Collection Requirements

In an important regulatory development, the Consumer Financial Protection Bureau (CFPB) has issued an interim final rule that revises the compliance dates for its small business lending data collection requirements under Regulation B, which implements the Equal Credit Opportunity Act. This latest update, crafted in response to ongoing litigation and operational feedback from financial institutions, extends the deadlines for adherence to the new rule, ensuring a phased and more manageable implementation process.

Extended Compliance Deadlines

The updated interim final rule provides staggered compliance dates, which are now being calibrated based on the volume of small business credit transactions processed by financial institutions. The adjusted timeline spans from mid-2024 to late 2026, extending the original October 1, 2024, deadline. Large-volume lenders that reported a robust number of transactions in 2022 and 2023, for example, will have until July 18, 2025, to comply with the new reporting requirements.

Flexibility in Advance Data Submission and Estimation Methods

Taking into account the challenges that some financial institutions may face in counting small business credit transactions, the CFPB’s revised rule includes provisions for anticipated difficulties. Institutions that cannot readily determine the exact number of transactions due to gaps in the data can now use reasonable estimates to comply with requirements, allowing for continued operation without penalties while they adjust to the new regulations. Furthermore, the rule encourages lenders to start gathering information about the ownership status of businesses by minority groups, women, and LGBTQI+ individuals, as well as the demographics of principal owners, in advance of their compliance start date. This proactive approach aims to support diversity and equal opportunity in lending sooner while also giving institutions a chance to refine their data collection processes ahead of full enforcement of the rule changes.

The implementation of the interim final rule marks the CFPB’s targeted effort to ease the regulatory burden for financial institutions and pave the way for equitable lending. Through this rule, the CFPB is shaping a more practical and scalable path to enhanced data collection practices by extending deadlines, allowing estimation methods, and embracing voluntary early adoption. The Bureau’s strategy underscores its dedication to a fair lending landscape while considering the variance in readiness and capacities among lenders, ensuring a more efficacious and coherent transition for the financial industry.