On May 10, the Consumer Financial Protection Bureau (CFPB) held a field hearing and issued a notice and request for information related to the small business lending market. Section 1071 of the Dodd-Frank Wall Street Reform and Consumer Protection Act amended the Equal Credit Opportunity Act to require “financial institutions” (as defined in Section 1071) to compile, maintain and report information concerning credit applications made by women-owned, minority-owned and small businesses. The purpose of the data collection is to facilitate enforcement of fair lending laws and to enable communities, governmental entities and creditors to identify business and community development needs and opportunities of women-owned, minority-owned and small businesses.
Specifically, the CFPB is seeking to learn more about the institutions, credit products, recording systems, underwriting approaches, distribution channels and types of applicants in the small business lending market, in order to inform its rulemaking implementing Section 1071. The CFPB also is seeking more information regarding the business lending data that financial institutions currently use and maintain in connection with credit applications made by small businesses, including women-owned and minority-owned small businesses, and the potential complexity and cost of small business data collection and reporting. The CFPB is soliciting comment from the public regarding privacy concerns related to the disclosure purposes of Section 1071, including controls that must be in place to ensure the protection of the data collected.
To this end, the CFPB has distributed questions based on five categories of interest: (1) the definition of a small business; (2) what data points the CFPB should require to be collected; (3) what lenders should be included in the data collection; (4) what kinds of financial products and credit are offered to small businesses; and (5) privacy concerns related to the data collection. Comments are due 60 days after the filing is published in the Federal Register.
The CFPB also published a white paper summarizing its preliminary research on the key dimensions of the small business lending landscape, which is available here.
The notice and request for information is available here.