The US Consumer Financial Protection Bureau (CFPB) has introduced a proposed rule that would scale back and phase in the small business lending data collection requirements mandated by Section 1071 of the Dodd-Frank Act. The proposal, released on November 13, 2025, aims to address industry concerns about market disruption. The public comment period for this proposal will end on December 15, 2025.
Section 1071 was established under the Dodd-Frank Act to require financial institutions to collect data on credit applications from women-owned, minority-owned, and small businesses. This measure is intended to support fair lending enforcement. When the CFPB finalized its initial rule in March 2023, it required over twenty data points per covered transaction. This broad scope led to legal challenges regarding both the burden placed on institutions and questions about the CFPB’s funding structure.
A nationwide stay was imposed on compliance until May 2024, when the U.S. Supreme Court upheld the constitutionality of the CFPB’s funding mechanism. This decision allowed the agency to move forward with a revised version of its rule.
Under the new proposal, several key changes are outlined:
– The threshold for mandatory reporting would increase from 100 to 1,000 covered originations in each of the two previous calendar years. This change would exempt most community-based financial institutions.
– The definition of a “small business” for reporting purposes would be narrowed from those with gross annual revenues of $5 million or less to $1 million or less.
– Certain transactions—such as Merchant Cash Advances, agricultural loans, and small-dollar credits of $1,000 or less—would be excluded from coverage.
– Five discretionary data points would be removed: application method, application recipient, denial reasons for application, number of workers employed by the business, LGBTQI+-owned business status, and pricing information including interest rates and fees.
– Farm Credit System lenders would be exempted entirely from these requirements.
The proposal also sets out a single compliance deadline for all covered institutions: January 1, 2028. This replaces an earlier multi-tiered schedule that began as early as October 2024 for some entities. The first filing deadline for collected data is proposed for June 1, 2029; this submission will cover activity during calendar year 2028.
The revised approach seeks to provide greater clarity and more time for affected lenders to prepare for compliance with these requirements.
“The CFPB’s decision to drastically narrow the scope of the Section 1071 rule is a strategic regulatory concession, providing clarity and a substantial time buffer for the lending industry. This January 01, 2028 compliance deadline should not be thought of as a delay but rather as a definitive window for preparation.”
“For high-volume institutions, the mandate now is to move past reactive compliance. Leveraging this extended period to align core digital lending platforms—ensuring new threshold filters and streamlined data requirements are accurately integrated—will transform this regulatory obligation into a core operational strength. Ultimately, those who treat this as an opportunity to optimize their lending data quality and digital customer experience will emerge with a clear competitive advantage.”
Further details about this development can be found through official sources such as CFPB notification and Final rule in Federal Register.
