The Consumer Financial Protection Bureau has released a new proposal to significantly revise its Section 1071 small business lending rule, aiming to reduce compliance burdens, narrow the scope of required data collection, and delay the start date for reporting. The move comes as the agency continues to face litigation over the 2023 rule and ongoing questions about its own long-term funding.
The proposal, scheduled to be published in the Federal Register today, would mark a meaningful shift for institutions across the commercial credit space. It would also provide additional relief for credit unions and community lenders that previously argued the 2023 rule would require extensive system changes and operational restructuring.
Key changes
- Only institutions originating at least 1,000 covered small business credit transactions in both 2026 and 2027 would need to report data.
- This is a major increase from the prior 100 loan threshold.
- The revenue cutoff to define a small business would drop from $5 million to $1 million.
- The CFPB says this aligns better with Community Reinvestment Act metrics and existing Regulation B practices.
- Fewer businesses would fall under the 1071 reporting regime.
Reduced number of data points: The bureau proposes eliminating several optional or discretionary data points that were included in the 2023 final rule. Removed items would include:
- Application method
- Application recipient
- Pricing information
- Denial reasons
- Number of workers
The focus would shift to statutory data fields and a limited number of additional demographic responses.
Exclusions for certain products and lenders
- Merchant cash advances
- Agricultural credit
- Small dollar loans under $1,000
- Farm Credit System lenders
Single compliance date
- All reporting would begin January 1, 2028.
- This replaces the complex tiered rollout in the 2023 rule.
Why the CFPB Is making the change: The Bureau says scaling back the rule will:
- Improve the quality of early data collection
- Reduce complications for small lenders
- Minimize disruptions in small business lending markets
- Allow time for industry learning before expanding data collection in later years
This incremental approach mirrors how the Home Mortgage Disclosure Act evolved over several decades.
Context: The 2023 final rule has been tied up in lawsuits from trade associations including the Texas Bankers Association, credit unions, and commercial financing groups. Multiple courts have delayed compliance deadlines for affected lenders.
Meanwhile, the CFPB’s November 11 notice indicates the agency may run out of money in early 2026 because it is temporarily barred from accessing Federal Reserve funding. Although the Bureau says current funds will last through at least the end of 2025, its operational future remains unclear.
What happens next:
- Comments will be accepted for 30 days following publication.
- Industry groups including America’s Credit Unions plan to submit formal feedback.
- Once the comment period closes, the CFPB must decide whether to finalize the changes or make further revisions.
